Out-of-state audits apply to former self-insurers under what condition?

• A. They still had open claims
• B. They have no claims
• C. They had relocated out of state
• D. They were currently insured

Answer: (A)

Open claims create ongoing financial obligations that regulators must verify are fully funded, even if the employer is no longer active as a self-insurer or has moved to another state. When there are active claims, an out-of-state audit helps ensure reserves and claim handling are sufficient to cover those liabilities across state lines. If there are no open claims, there’s no outstanding liability to audit, so an out-of-state audit isn’t needed. Relocating or being currently insured doesn’t by itself create or reflect ongoing open liabilities for a former self-insurer, which is why those situations don’t prompt the audit.