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                                          SUBSTITUTE HOUSE BILL NO. 1972

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                                                                          C 302 L 86 PV

State of Washington                              49th Legislature                              1986 Regular Session

By House Committee on Financial Institutions & Insurance (originally sponsored by Representatives P. King and Long)

Read first time 2/7/86 and passed to Committee on Rules.

AN ACT Relating to self-insurance; and amending RCW 48.62.040 and 48.01.050.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 4, chapter 256, Laws of 1979 ex. sess. as amended by section 1, chapter 278, Laws of 1985 and RCW 48.62.040 are each amended to read as follows:

          (1) Except as provided in subsection (2) of this section, the governing body of any one or more local governmental entities may, as an alternative or in addition to exercising any one or more of the powers granted in RCW 48.62.030 and 36.16.138, as now or hereafter amended, or any other provision of law, form together into or join a pool or organization for the joint purchasing of insurance, and/or joint self-insuring, and/or joint hiring or contracting for risk management services to the same extent that they may individually purchase insurance, self-insure, or hire or contract for risk management services.

          (2)(a) No organization of local governmental entities, other than local school districts and educational service districts, that is organized under this section for the purpose of self-insuring shall provide any self-insurance other than liability and property insurance. For purposes of this section, liability insurance shall include but not be limited to coverage for claims arising from the tortious or negligent conduct of the local government entity, its officers, employees, or agents thereof, or any error or omission on the part of said local government entity, its officers, employees or agents thereof as a result of which a claim may be made against the local government entity.

          (b) Local school districts and educational service districts may not organize under this section for the purpose of providing joint self-insured life, health, health care, accident, disability and salary protection or insurance, or any combination thereof, to the district employees, students, directors, or any of their dependents.

          (3)   The agreement to form such a pooling arrangement shall be made under chapter 39.34 RCW.          Any pool or organization authorized to be formed by this section shall be subject to audit by the state auditor.

        Sec. 2.  Section .01.05, chapter 79, Laws of 1947 as last amended by section 9, chapter 277, Laws of 1985 and RCW 48.01.050 are each amended to read as follows:

          "Insurer" as used in this code includes every person engaged in the business of making contracts of insurance, other than a fraternal benefit society.  A reciprocal or interinsurance exchange is an "insurer" as used in this code.  Two or more hospitals, as defined in RCW 70.39.020(3), which join and organize as a mutual corporation pursuant to chapter 24.06 RCW for the purpose of insuring or self-insuring against liability claims, including medical liability, through a contributing trust fund shall not be deemed an "insurer" under this code.  Two or more local governmental entities, as defined in RCW 48.62.020, which pursuant to RCW 48.62.040, 48.62.035, or any other provision of law join together and organize to form an organization for the purpose of jointly self-insuring or self-funding shall not be deemed an "insurer" under this code.  Two or more fraternal benefit societies subject to chapter 24.20 RCW which join together and organize to form an organization for the purposes of self-insuring for damage to property and against liability claims shall not be deemed an "insurer" under this code.  Two or more cooperatives operated as cooperatives under chapters 23.86, 24.06, and 24.32 RCW, or Title 23A RCW, which join and organize as a mutual corporation pursuant to chapter 24.06 RCW for the purpose of insuring or self-insuring their directors and officers against liability claims through a contributing trust fund shall not be deemed an "insurer" under this code.                Passed the House March 9, 1986.

Speaker of the House.

Passed the Senate March 5, 1986.

President of the Senate.