BILL REQ. #:  H-2174.2 

READ FIRST TIME 03/05/03.   

     AN ACT Relating to authorizing nonprofit corporations to participate in self-insurance risk pools; amending RCW 48.62.021; adding a new section to chapter 48.62 RCW; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature finds that recent increases in 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 and local government entities to individually or jointly participate in self-insurance risk pools.

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" has the same meaning as defined in RCW 24.03.005(3).
     (8) "Private, nonprofit transportation provider" has the same meaning as defined in RCW 81.66.010(3).

NEW SECTION.  Sec. 3   A new section is added to chapter 48.62 RCW to read as follows:
     (1) A nonprofit corporation that is a private, nonprofit transportation provider in accordance with chapter 81.66 RCW may form or join a self-insurance program with a local government entity or entities, and may jointly purchase insurance or reinsurance with a local government entity or entities for property and liability risks, and health and welfare benefits.
     (2) A nonprofit corporation that is a private, nonprofit transportation provider in accordance with chapter 81.66 RCW that participates in a self-insurance program 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.

NEW SECTION.  Sec. 4   The state risk manager shall report to the appropriate policy committees of the legislature by December 1, 2004, regarding the implementation of section 3 of this act, and the report must include:
     (1) The number and description of each private, nonprofit transportation provider participating in a self-insurance risk pool with a local governmental entity or entities;
     (2) The impact of the participation of private, nonprofit transportation providers on self-insurance risk pools; and
     (3) The financial soundness of each risk pool that includes private, nonprofit transportation providers.