5869 AMH FII H5105.1

SB 5869 - H COMM AMD

By Committee on Financial Institutions & Insurance

ADOPTED 03/03/2004

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. The legislature finds that recent increases in property and liability insurance premiums experienced by some nonprofit organizations have the potential to negatively impact the ability of these organizations to continue to offer the level of service they provide in our communities. The legislature finds that nonprofit organizations are distinct from private for-profit businesses. By their very nature, nonprofit organizations are formed for purposes other than generating a profit, and are restricted from distributing any part of the organization's income to its directors or officers. Because of these characteristics, nonprofit organizations provide a unique public good to the residents in our state.

The legislature finds that in order to sustain the financial viability of nonprofit organizations, they should be provided with alternative options for insuring against risks. The legislature further finds that local government entities and nonprofit organizations share the common goal of providing services beneficial to the public interest. The legislature finds that allowing nonprofit organizations and local government entities to pool risk in self-insurance risk pools may be of mutual benefit for both types of entities. Therefore, it is the intent of the legislature to allow nonprofit organizations to form or participate in self-insurance risk pools with other nonprofit organizations or with local government entities where authority for such risk pooling arrangements does not currently exist in state or federal law.

Sec. 2. RCW 48.62.021 and 2002 c 332 s 24 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Local government entity" or "entity" means every unit of local government, both general purpose and special purpose, and includes, but is not limited to, counties, cities, towns, port districts, public utility districts, water-sewer districts, school districts, fire protection districts, irrigation districts, metropolitan municipal corporations, conservation districts, and other political subdivisions, governmental subdivisions, municipal corporations, and quasi-municipal corporations.

(2) "Risk assumption" means a decision to absorb the entity's financial exposure to a risk of loss without the creation of a formal program of advance funding of anticipated losses.

(3) "Self-insurance" means a formal program of advance funding and management of entity financial exposure to a risk of loss that is not transferred through the purchase of an insurance policy or contract.

(4) "Health and welfare benefits" means a plan or program established by a local government entity or entities for the purpose of providing its employees and their dependents, and in the case of school districts, its district employees, students, directors, or any of their dependents, with health care, accident, disability, death, and salary protection benefits.

(5) "Property and liability risks" includes the risk of property damage or loss sustained by a local government entity and the risk of claims arising from the tortious or negligent conduct or any error or omission of the local government entity, its officers, employees, agents, or volunteers as a result of which a claim may be made against the local government entity.

(6) "State risk manager" means the risk manager of the risk management division within the office of financial management.

(7) "Nonprofit corporation" or "corporation" has the same meaning as defined in RCW 24.03.005(3).

NEW SECTION. Sec. 3. A new section is added to chapter 48.62 RCW to read as follows:

(1) A nonprofit corporation may form or join a self-insurance risk pool with one or more nonprofit corporations or with a local government entity or entities for property and liability risks.

(2) A nonprofit corporation that participates in or forms a self-insurance risk pool with one or more nonprofit corporations or with a local government entity or entities, as provided in subsection (1) of this section, is subject to the same rules and regulations that apply to a local government entity or entities under this chapter.

(3) This section does not apply to a nonprofit corporation that:

(a) Individually self-insures for property and liability risks;

(b) Participates in a risk pooling arrangement, including a risk retention group or a risk purchasing group, regulated under chapter 48.92 RCW, or is a captive insurer authorized in its state of domicile; or

(c) Is a hospital licensed under chapter 70.41 RCW or an entity owned, operated, controlled by, or affiliated with such a hospital that participates in a self-insurance risk pool or other risk pooling arrangement, unless the self-insurance pool or other risk pooling arrangement for property and liability risks includes a local government entity."

Correct the title.

EFFECT: Authorizes a nonprofit corporation to form a self- insurance risk pool with another nonprofit corporation or a local government entity for property or liability risks.

Provides that nonprofit corporations that form self-insurance risk pools are subject to the same regulations as are local government entities that form self-insurance risk pools.

Exempts from this act nonprofit corporations that: Individually self-insure for property and liability risks; participate in a risk pool regulated under the insurance code or is a captive insurer authorized as such in another state; or is a licensed hospital or is owned or affiliated with a hospital that participates in a self- insurance risk pool.

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