§ 11-9-408. Insurance policies

(a) Contents. Every policy or contract of insurance issued by a carrier to an employer to secure the payment of compensation under this chapter shall contain:

1. (1)

   1. (A) Provisions that identify the insured employer and either identify each covered employee or describe covered employees by class or type of labor performed and the estimated number of employees of each such class or type.

   2. (B) No single policy of workers’ compensation insurance may be issued to any group of employers who are unaffiliated with one another in terms of ownership, control, or right to participate in the profits of the affiliated enterprises;

2. (2) Provisions that insolvency or bankruptcy of the employer or discharge therein shall not relieve the carrier from payment of compensation for compensable injuries sustained by an employee during the term of the policy or contract;

3. (3)

   1. (A) The agreement of the carrier that it will promptly pay to the person entitled to compensation every installment of compensation that may be awarded or agreed upon and that this obligation shall not be affected by any default of the employer or by any default in the giving of any notice required by the policy or otherwise.

   2. (B) The agreement shall be construed to be a direct obligation by the carrier to the person entitled to compensation, enforceable in that person’s name; and

4. (4) Such other provisions as the State Insurance Department allows or requires carriers to include in workers’ compensation policies as otherwise provided at the Arkansas Workers’ Compensation Insurance Plan, § 23-67-301 et seq.

(b) Cancellation.

1. (1) An employer may cancel coverage with a carrier by giving the carrier at least thirty (30) days’ notice, unless a shorter period is permitted under subdivision (b)(1)(B) of this section.

   1. (A) Cancellation of coverage is effective at 12:01 a.m. thirty (30) days after the date the cancellation notice is received by the carrier, unless a later date is specified in the notice to the carrier.

   2. (B)

      1. (i) An employer may cancel coverage effective less than thirty (30) days after written notice is received by the carrier where the employer obtains other coverage or becomes a self-insurer.

      2. (ii) A cancellation under this subdivision is effective immediately upon the effective date of the other coverage or upon authorization as a self-insurer.

2. (2)

   1. (A) A notice of cancellation from the carrier shall state the hour and date that cancellation is effective.

   2. (B) A carrier shall not cancel coverage issued to an employer under this chapter prior to the date specified for expiration in the policy or contract or until at least thirty (30) days have elapsed after a notice of cancellation has been mailed to the Workers’ Compensation Commission and to the employer, or until ten (10) days have elapsed after the notice has been mailed to the employer and to the commission if the cancellation is for nonpayment of premium.

   3. (C) However, if the employer procures other insurance within the notice period, the effective date of the new policy shall be the cancellation date of the old policy.

3. (3) Cancellation of coverage by an employer or a carrier shall in no way limit liability that was incurred under the policy or contract prior to the effective date of cancellation.

(c) Coverage.

1. (1) No policy or contract of insurance shall be issued against liability under this chapter unless the policy or contract covers the entire liability of the employer. Split coverage whereby some employees of an employer are insured by one carrier and other employees are insured by another carrier, or by the Arkansas Workers’ Compensation Insurance Plan, § 23-67-301 et seq., or a plan of self-insurance is expressly prohibited except for:

   1. (A) A policy issued in accordance with § 23-92-409 so long as all employees performing services for a client are covered under the same policy, contract, or plan; or

   2. (B) A policy issued covering the liability of an employer or of multiple employers as to specific jobs, ventures, contracts, or undertakings, but only if the policy meets with the reasonable satisfaction and approval of the Insurance Commissioner that the policy is in the best interest of the employers and the employees concerned and does not unduly or improperly affect the continuity of workers’ compensation coverage by seriously and negatively affecting other carriers and agents with outstanding policies issued to any of the employers in issue.

2. (2) As to any questions of liability between the employer and the carrier, the terms of the policy or contract shall govern.

(d) Under such rules as may be adopted by the Insurance Commissioner, and notwithstanding other provisions of this chapter, he or she may certify five (5) or more employers as an insurance group which shall be considered an employer for the purposes of this chapter.