§ 45-5-20.1 - Power of city and town councils and regional school districts to jointly establish an insurance corporation, to obtain insurance, and to enter into a cooperative risk management pro
SECTION 45-5-20.1
§ 45-5-20.1 Power of city and towncouncils and regional school districts to jointly establish an insurancecorporation, to obtain insurance, and to enter into a cooperative riskmanagement program. – (a) Cities and town councils, school committees, water and fire districts may,through passage of a resolution, establish agreements between two (2) or morecities, town councils, school committees, and water and fire districts forobtaining for obtaining or effecting insurance by self insurance, for obtainingor effecting insurance from any insurer authorized to transact insurance in thestate, or for obtaining and effecting insurance secured in accordance with anyother method provided by law, or by combination and of the provisions of thissection for obtaining and effecting insurance. Agreements made pursuant to thissection may provide for pooling of self insurance reserves, risks, claims andlosses, and of administrative expenses associated with the same, among localgovernment units.
(b) For purposes of this section the term "Eligible Entities"shall mean any city, town, school committee, water or fire district, or otherpublic or quasi-municipal authority, agency or entity, or organization that isan instrumentality of such cities or towns, or any group of such cities ortowns, authorities, agencies or entities which is a member of the corporationscreated pursuant to the provisions of this section.
(c) To accomplish the purposes of this section any two (2) ormore cities, towns, school committees, or water and fire districts, mayauthorize the creation of separate corporations (the "corporation") for thepurpose of: (1) issuing to the eligible entities policies of insurance andreinsurance of all types and categories, including, without being limited to,the following types and categories: property, casualty, and life, accident, andhealth insurance, and (2) developing and administering an interlocal riskmanagement program. The corporations, in addition, may have as their purposesreducing the risk of its members; safety engineering; distributing, sharing,and pooling risks; acquiring excess loss insurance; and processing anddefending claims against the members of the corporations. Any contributionsmade to the corporations for the purpose of distributing, sharing, or poolingrisks shall be made on actuarially sound basis, and the corporations shall havean audit performed annually, copies of which shall be provided to the membersof the corporations, and the auditor general; discrete accounts shall be keptfor each risk management program developed and administered by the corporations.
(d) The corporations shall not be considered an insurancecompany and shall not be subject to the provisions of the laws of the state ofRhode Island regulating insurance companies and therefore shall in no way beregulated by the Rhode Island department of business regulation.
(e) The corporations created pursuant to the provisions ofthis section will be created by filing articles of incorporation pursuant tochapter 6 of title 7 entitled Rhode Island Nonprofit Corporation Act and thearticles of incorporation will be filed by an incorporator/incorporatorsdesignated by the city, town councils, school committees, or water or firedistricts, authorizing the creation of the corporation. The articles ofincorporation creating the corporations pursuant to the provisions of thissection may contain provisions, not inconsistent with this section, that theincorporators determine to be desirable or useful in fulfilling the purposesset forth in this section. The corporations created pursuant to the provisionsof this section will have the powers of a nonprofit corporation created underchapter 6 of title 7 entitled Rhode Island Nonprofit Corporation Act including,without being limited to, the power to issue bonds, notes, and otherobligations in any amounts and upon any terms that the corporation's governingboard determines.
(f) The corporations created pursuant to the provisions ofthis section, notwithstanding the filing of its articles of incorporationpursuant to chapter 6 of title 7 entitled Rhode Island Nonprofit CorporationAct, (1) will be deemed to be public corporations, instrumentality, and agencyof the state of Rhode Island acting for the benefit of the municipalities whichare members of the corporations and its eligible entities but will notconstitute a department of the government of the state of Rhode Island, and (2)will be deemed to be exercising public and essential governmental functions ofthe state of Rhode Island. No part of the net earnings of the corporationscreated pursuant to the provisions of this section will be distributable to, orinure to the benefit of, any private person. The members of the governing boardof the corporations created pursuant to the provisions of this section willconsist solely of chief executives, chief elected officials, finance directors,or treasurers of municipalities, or any other municipal officials that may beprovided for in the bylaws of the corporations, and the members shall receiveno compensation for the performance of their duties but each member may bereimbursed for his or her reasonable expenses incurred in carrying out theirduties.
(g) The bonds, notes, or other obligations issued by thecorporations created pursuant to the provisions of this section will not bedeemed to constitute a debt or liability or obligation of the state of RhodeIsland or of any political subdivision of the state or of any municipalitywhich is a member of the corporation but will be payable solely from therevenues or assets of the corporations.
(h) Notwithstanding any provision of this chapter or specialor general law to the contrary, each eligible entity which is a member of thecorporations created pursuant to the provisions of this section will beauthorized to enter into contracts with the corporations with respect to, amongother matters, the payment of premiums and other payments, for terms notexceeding twenty-five (25) years in duration. To the extent that the obligationto pay premiums or make other payments under any contract is deemed toconstitute the incurring of indebtedness by an eligible entity the contract maynevertheless be entered into without obtaining the approval of the electors ofthe city or town notwithstanding the provisions of §§ 45-12-19 and45-12-20 and notwithstanding any provisions of the city's or town's charter orany special or general law to the contrary. Any contract may be entered into byan eligible entity either prior to or subsequent to the making of anyappropriations which may be needed to carry out the obligations of the eligibleentity under the contract.
(i) The property and assets of the corporations createdpursuant to the provisions of this section, the income of the corporations, andany bonds, notes, or other obligations issued by the corporation, theirtransfer, and the income from these (including any profits made on the salethereof) will at all times be free from taxation by the state of Rhode Islandor any political subdivision or other instrumentality of the state of RhodeIsland, excepting inheritance, estate, and gift taxes with respect to thebonds, notes, or other obligations issued by the corporations.
(j) Whenever the governing board of the corporations createdpursuant to the provisions of this section determines that the purposes forwhich the corporations were created have been substantially fulfilled and allbonds, notes, or other obligations of the corporations have been fully paid oradequate provision has been made for their payment, the corporations may bedissolved in the manner provided for nonprofit corporations pursuant to chapter6 of title 7 entitled Rhode Island Nonprofit Corporation Act and, upon thecorporations' dissolution, title to all funds and assets of the corporationshall vest in and become the property of the members of the corporation inproportions that are provided for in the corporation's articles ofincorporation.
(k) No corporations created pursuant to the provisions ofthis section shall be required to pay any recording or filing fee or anytransfer tax of any kind on account of papers or instruments recorded or filedby it or on its behalf.
(l) No corporations created pursuant to the provisions ofthis section and no agent or broker acting on behalf of the corporations shallbe required to pay a surplus line premium tax of any kind on premiums for anypolicies of insurance and reinsurance to or from the corporations.