Sec. 611.

(1) Each employer under this act, subject to the approval of the director, shall secure the payment of compensation under this act by either of the following methods:

(a) By receiving authorization from the director to be a self-insurer. In the case of an individual employer, the director may grant that authorization upon a reasonable showing by the employer of the employer’s solvency and financial ability to pay the compensation and benefits provided for in this act and to make payments directly to the employer’s employees as the employees become entitled to receive the payment under the terms and conditions of this act and pursuant to R 408.43c of the Michigan administrative code. If the director determines it to be necessary, the director shall require the furnishing of a bond or other security in a reasonable form and amount. Such security as may be required by the director may be provided by furnishing specific excess insurance, aggregate excess insurance coverage through a carrier authorized to write in this state in an amount acceptable to the director, a surety bond, an irrevocable letter of credit in a format acceptable to the bureau, and claims payment guarantees.

(b) By insuring against liability with an insurer authorized to transact the business of worker’s compensation insurance within this state.

(2) Under procedures and conditions specifically determined by the director, 2 or more employers in the same industry with combined assets of $1,000,000.00 or more, or 2 or more public employers of the same type of unit, may be permitted by the director to enter into agreements to pool their liabilities under this act for the purpose of qualifying as self-insurers. For purposes of this subsection, cities, townships, counties, and villages; or 1 or more of the agencies, instrumentalities, or other legal entities of cities, townships, counties, or villages or any combination thereof; or authorities of 1 or more of cities, townships, counties, or villages or any combination thereof created pursuant to law shall be considered public employers of the same type of unit. An employer member of the approved group shall be classified as a self-insurer. For purposes of this subsection, universities and colleges, community colleges, and local and intermediate school districts, shall be considered public employers of the same type of unit. The director may grant authorization to become a member of an approved group upon a reasonable showing by an employer of the employer’s solvency and financial stability to meet the employer’s obligations as a member of the group. If the director determines it to be necessary, the director may require the furnishing of a surety bond, fidelity bond, or other security by the group in a reasonable form and amount. Such security as may be required by the director may be provided by furnishing specific excess insurance, aggregate excess insurance coverage through a carrier authorized to write in this state, including the state accident fund, in an amount acceptable to the director. An irrevocable letter of credit in a format currently used by the bureau on December 15, 1992 or a surety bond may be furnished in place of aggregate excess insurance. The current format of the irrevocable letter of credit used by the bureau on December 15, 1992 shall be acceptable until the format of the irrevocable letter of credit is promulgated by rules of the bureau. If an irrevocable letter of credit is proposed, the director may require an independent actuarial opinion from the group fund supporting the proposal and estimating the ultimate loss at 90% confidence level. Assets of the fund allocated for the payment of administrative expenses or set aside for claims payments shall not be used as collateral for the irrevocable letter of credit. Use of surplus assets as collateral shall require prior bureau approval. If the director determines it to be necessary, the director may obtain an independent review of the actuarial opinion submitted by the group fund at the expense of the group fund to determine the ability of the group fund to meet its obligation under the terms and conditions of this act. The group fund shall make available all documentation used for the actuarial report if requested by the director for an independent review. An employer, except a public employer, permitted to become a member of a self-insurers’ group under this act shall execute a written agreement in which the employer agrees to jointly and severally assume and discharge, by payment, any lawful award entered by the bureau against a member of the group. If the case in which the award is entered is appealed by either party, then the award shall first be upheld before a member of the group may be liable. In the case of a public employer that is permitted to become a member of a self-insurers’ group, any lawful award entered by the bureau against a public employer which is a member of a group, if the award is upheld on appeal, shall be a liability of the group jointly but not severally and, if the group is unable to pay the award, the group or the bureau shall individually assess those public employers who were members on the date of injury to the extent necessary to pay the award. An assessment shall be a contractual obligation of the public employer. As used in this subsection, “public employer” means a city, village, township, county, school district, or community college; or an agency, entity, or instrumentality thereof; or an authority comprised of any combination of the foregoing. This subsection shall not alter the obligation of either a group or an employer from complying with section 862. For purposes of this subsection, an authorized group self-insurer, in conjunction with providing security for the payment of compensation and benefits provided for in this act, may provide coverage customarily known as employer’s liability insurance for members of the group.

(3) For the purpose of determining whether employers are in the same industry under subsection (2), the following shall apply:

(a) The forest industry shall be considered as those businesses engaged in the growing, harvesting, processing, or sale of forest products, except at the retail level, unless more than 80% of the income from the retailer comes from the growing, harvesting, processing, or wholesale sale of forest products, and any supplier or service companies that receive more than 80% of their income from these businesses.

(b) “Forest products” include Christmas trees, firewood, maple syrup, and all other products derived from wood or wood fiber which are manufactured with woodworking equipment including saws, planers, drills, chippers, lumber dry kilns, sanders, glue presses, nailers, notchers, shapers, lathes, molders, and other similar finishing processes.

(4) The director may permit a nonpublic health care facility employer to become a member of a self-insurers’ group with public employers pursuant to subsection (2) if the principal service rendered by the nonpublic health care facility employer is the same type of service rendered by the public employers. If a nonpublic health care facility employer is permitted to become a member of the same self-insurers’ group with public employers, any lawful award entered by the bureau against that nonpublic health care facility employer, if the award is upheld on appeal, shall be a liability of the group and, if the group is unable to pay the award, the group or the bureau shall individually assess those nonpublic health care facility employers who were members on the date of injury to the extent necessary to pay the award. The director may waive the requirement of the written agreement required of a nonpublic health care facility employer under subsection (2) as to any member of a group involving a combination of public and nonpublic health care facility employers. Except as otherwise provided in this subsection, subsection (2) shall be applicable to all self-insurers’ groups and their individual employer members.

(5) The director may decline to approve an application for individual or group self-insura