Bill Text: NJ S3294 | 2016-2017 | Regular Session | Introduced
Bill Title: Permits independent State authorities to establish joint insurance funds.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2017-06-12 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S3294 Detail]
Download: New_Jersey-2016-S3294-Introduced.html
Sponsored by:
Senator JEFF VAN DREW
District 1 (Atlantic, Cape May and Cumberland)
SYNOPSIS
Permits independent State authorities to establish joint insurance funds.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning joint insurance funds for independent State authorities, amending P.L.2011, c.78, and supplementing chapter 31 of Title 52 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Dependent" means the spouse, domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), civil union partner as defined in section 2 of P.L.2006, c.103 (C.37:1-29), or child of an eligible employee, subject to applicable terms of the health insurance plan covering the employee.
"Health insurance" means health insurance as defined pursuant to N.J.S.17B:17-4 or service benefits as provided by health service corporations, hospital service corporations, or medical service corporations authorized to do business in this State.
"Governing body" means the council, board, or body exercising general administrative authority over the actions and finances of an independent State authority.
"Independent State authority" means an authority, board, commission, corporation, or other agency or instrumentality of the State allocated in, but not of, a department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution, and which is independent of any supervision or control by the department in which it is allocated.
"Life insurance" means life insurance as defined pursuant to N.J.S.17B:17-3.
2. (New section) a. The governing body of an independent State authority may agree to join with any other independent State authority to establish a joint insurance fund for any of the following purposes:
(1) to insure against any loss or damage however caused to any property, motor vehicle, equipment, or apparatus owned or controlled by the authority;
(2) to insure against liability resulting from the use or operation of any motor vehicle, equipment, or apparatus owned or controlled by the authority;
(3) to insure against liability for an authority's negligence and that of its officers, employees, and servants, whether or not compensated or part-time, who are authorized to perform any act or service on behalf of the authority, but not including an independent contractor within the limitations of the "New Jersey Tort Claims Act," N.J.S.59:1-1 et seq.;
(4) to insure against bodily injury and property damage claims arising from environmental impairment liability, and legal representation therefor, to the extent that such coverage, as approved by the Commissioner of Banking and Insurance, are provided by the purchase of insurance and no risk is retained by the fund;
(5) to insure against any loss or damage from liability as established by chapter 15 of Title 34 of the Revised Statutes;
(6) to provide contributory or noncontributory, self-funded or partially self-funded health insurance to its employees, their dependents, or both; or
(7) to provide contributory or noncontributory, self-funded, or partially self-funded group term life insurance to its employees, their dependents, or both.
b. A joint insurance fund established pursuant to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) is not an insurance company or an insurer under the laws of this State, and the authorized activities of the fund do not constitute the transaction of insurance nor doing an insurance business. A fund established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be subject to the provisions of Subtitle 3 of Title 17 of the Revised Statutes.
3. (New section) a. Upon the establishment of a joint insurance fund, the governing body of each participating independent State authority shall appoint one employee of the authority to represent that authority as an insurance fund commissioner. Each independent State authority may also appoint one employee to serve as an alternate insurance fund commissioner. Commissioners and alternates shall hold office at the pleasure of the governing body of the appointing authority. In the event that the number of independent State authorities represented in a joint insurance fund is an even number, each participating authority shall annually have the opportunity to select one additional employee to serve as a commissioner on a rotating basis.
If the total number of member authorities exceeds seven, then the commissioners shall annually meet to select an odd number of commissioners, not to exceed seven, to serve as the executive committee of the fund. The commissioners may also select an odd number of commissioners, not to exceed seven, to serve as alternates on the executive committee. The executive committee shall exercise the full power and authority of the commission. The entire board of commissioners shall fill any vacancies on the executive committee by conducting an election. The commissioners shall serve without compensation, except that the commissioners may vote to pay themselves a fee for attending commission meetings, or executive committee meetings, not to exceed $150 per meeting.
The commission shall annually elect a chairperson and a secretary.
b. In the case of a joint insurance fund established for the purposes of providing environmental liability coverage pursuant to paragraph (4) of subsection a. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), each member of that joint insurance fund shall have proportional voting based upon the current year's assessment of member authorities for their contributions to the fund.
c. The commissioners shall have the power and authority to:
(1) employ necessary clerical assistants, whose compensation the commissioners shall fix and pay in the same manner as other employees of the member authorities;
(2) invest the fund, and all additions and accretions thereto, in such securities, as they shall deem best suited for the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill);
(3) adopt rules and regulations for the control and investment of the fund; and
(4) delegate any of the functions, powers, and duties relating to the investment and reinvestment of funds, including the purchase, sale, or exchange of any investments, securities, or funds, to an investment or asset manager. The commissioners shall detail any transfer of investment power and duties made pursuant to this paragraph in a written contract for services between the joint insurance fund and an investment or asset manager. The commissioners shall file the contract with the Commissioner of Banking and Insurance. The commission shall not base compensation under such an arrangement upon commissions related to the purchase, sale, or exchange of any investments, securities, or funds.
d. The commissioners may transfer moneys held in the fund to the Director of the Division of Investment in the Department of the Treasury for investment on behalf of the fund, pursuant to the written directions of the commissioners, signed by an authorized officer of the joint insurance fund, or any investment or asset manager designated by them. The commissioners shall provide a written notice to the director detailing the extent of the authority delegated to any investment or asset manager so designated to act on behalf of the joint insurance fund. The director shall invest any moneys transferred to the director for investment subject to the standards governing the investment of other funds that the State Investment Council manages under its rules and regulations.
e. The commissioners shall not withdraw moneys transferred to the director for investment, except:
(1) pursuant to the written directions of the commissioners signed by an authorized officer of the joint insurance fund, or any investment or asset manager the commissioners designate;
(2) upon withdrawal or expulsion of a member authority from the fund;
(3) upon termination of the fund; or
(4) in specific amounts for payment of specific claims, administrative expenses, or member dividends upon affidavit of the director, chairperson of the board of commissioners, or other chief executive officer of the joint insurance fund.
f. The insurance fund commissioners or the executive board thereof, as the case may be, shall cause an annual audit to be conducted by an independent certified public accountant in accordance with rules and regulations promulgated by the Commissioner of Banking and Insurance. The insurance fund commissioners or the executive board thereof, as the case may be, shall submit copies of every audit to the Commissioner of Banking and Insurance within 30 State working days of its completion.
4. (New section) a. The commissioners shall prepare and, after the approval of the governing body of each participating independent State authority, shall adopt bylaws for the joint insurance fund. The bylaws shall include, but not be limited to:
(1) procedures for the organization and administration of the joint insurance fund, the insurance fund commission, and, if appropriate, the executive board of the fund. The procedures may include the designation of one member authority to serve as the lead agency to be responsible for the custody and maintenance of the assets of the fund and such other duties as may be assigned by the commissioners of the fund;
(2) procedures for the assessment of members for their contributions to the fund and for the collection of contributions in default;
(3) procedures for the maintenance and administration of appropriate reserves in accordance with sound actuarial principles;
(4) procedures for the purchase of commercial direct insurance or reinsurance, if any;
(5) contingency plans for paying losses in the event that the fund is exhausted;
(6) procedures governing loss adjustment and legal fees;
(7) procedures for the joining of the fund by a non-member authority;
(8) procedures for the withdrawal from the fund by a member authority;
(9) procedures for the expulsion of a member authority;
(10) procedures for the termination and liquidation of the joint insurance fund and the payment of its outstanding obligations; and
(11) such other procedures and plans as the Commissioner of Banking and Insurance may require by rule or regulation.
b. The bylaws of a joint insurance fund may include procedures to recognize and pay commissions or fees to insurance producers appointed by the fund, if any, or producers appointed by the member authorities, if any. The commissioners of a joint insurance fund shall file with the Commissioner of Banking and Insurance a description of any producer arrangement plan through which producers, who shall be licensed pursuant to the "New Jersey Insurance Producer Licensing Act of 2001," P.L.2001, c.210 (C.17:22A-26 et seq.), represent member authorities in their dealings with the joint insurance fund. The description shall include, but not be limited to, copies of all producer contracts, which shall include a description of the producers' obligations, responsibilities, and compensation; duration of contracts; and an indication whether the contracts are subject to renewal.
5. (New section) a. The commissioners shall prepare, or cause to be prepared, a plan of risk management for the joint insurance fund. The plan shall include, but not be limited to:
(1) the perils or liability to be insured against;
(2) limits of coverage, whether self-insurance, direct insurance purchased from a commercial carrier, or reinsurance;
(3) the amount of risk to be retained by the fund;
(4) the amount of reserves to be established;
(5) the proposed method of assessing contributions each member of the fund shall pay;
(6) procedures governing loss adjustment and legal fees;
(7) coverage to be purchased from a commercial insurer, if any;
(8) reinsurance to be purchased, if any, and the amount of premium therefor; and
(9) such other procedures and information as the Commissioner of Banking and Insurance may require by rule or regulation.
b. Whenever a joint insurance fund or member authority employs a producer to perform risk assessment or risk management, the commissioners of the joint insurance fund shall file with the Commissioner of Banking and Insurance a copy of the producer contract for review and approval by the commissioner in accordance with the provisions of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).
6. (New section) No joint insurance fund shall begin providing insurance coverage to its member authorities until the Commissioner of Banking and Insurance has approved its bylaws and plan of risk management as hereinafter provided:
a. The commissioners of each joint insurance fund shall file with the Commissioner of Banking and Insurance for approval a copy of the fund's bylaws adopted pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) and a copy of the fund's plan of risk management prepared pursuant to section 5 of that act.
b. Upon receipt of any bylaws and plan of risk management, the Commissioner of Banking and Insurance shall approve or disapprove any bylaws and plans on the basis of whether or not they conform with P.L. , c. (C. ) (pending before the Legislature as this bill) and the rules and regulations promulgated pursuant to that act. Within 25 State working days of the receipt of any bylaws and plan of risk management, the Commissioner of Banking and Insurance shall notify the commissioners of the joint insurance fund of the approval or disapproval. As a condition of approval, the Commissioner of Banking and Insurance may require modification of any bylaws or plan of risk management, as the commissioner may deem necessary, to bring them into conformity with P.L. , c. (C. ) (pending before the Legislature as this bill) and the rules and regulations promulgated pursuant to that act. No bylaws or plan of risk management disapproved by the Commissioner of Banking and Insurance, or a designee, shall take effect. If the Commissioner of Banking and Insurance, or designee, fails to approve or disapprove any bylaws or plan of risk management within 25 State working days, then the bylaws or plan of risk management shall be deemed approved.
If the Commissioner of Banking and Insurance disapproves of any bylaws or plan, the commissioner shall set forth in writing the reasons for disapproval. Upon the receipt of the notice of disapproval, the commissioners of the affected joint insurance fund may request a public hearing. The Commissioner of Banking and Insurance shall convene the public hearing in a timely manner.
c. Upon the approval of its bylaws and plan of risk management pursuant to the provisions of this section, a joint insurance fund may provide insurance coverage to its member authorities by self-insurance, the purchase of commercial insurance, or reinsurance, or any combination thereof.
7. (New section) The commissioners may amend the bylaws and plan of risk management of the fund; provided, however, that no such amendment shall take effect until approved as hereinafter provided.
a. The commissioners shall file with the Commissioner of Banking and Insurance for approval a copy of any amendment to the bylaws of the fund, upon approval by the governing bodies of three-fourths of the member authorities, or any amendment to the plan of risk management, upon adoption by the commissioners.
b. Upon receipt of the amendment, the Commissioner of Banking and Insurance shall approve or disapprove any amendment on the basis of whether or not it conforms with P.L. , c. (C. ) (pending before the Legislature as this bill) and the rules and regulations promulgated pursuant to that act. Within 25 State working days of the receipt of the amendment, the Commissioner of Banking and Insurance, or a designee, shall notify the commissioners of the joint insurance fund of the commissioner's approval or disapproval. As a condition of approval, the Commissioner of Banking and Insurance, or a designee, may require a modification of the amendment in order to bring its provisions into conformity with P.L. , c. (C. ) (pending before the Legislature as this bill) and the rules and regulations promulgated pursuant to that act. No amendment disapproved by the Commissioner of Banking and Insurance, or designee, shall take effect. If the Commissioner of Banking and Insurance, or designee, fails to approve or disapprove any amendment within 25 State working days of receipt, then the amendment shall be deemed to be approved.
If the Commissioner of Banking and Insurance disapproves of any amendment, the commissioner shall set forth in writing the reasons for disapproval. Upon the receipt of the notice of disapproval, the commissioners of the affected joint insurance fund may request a public hearing. The Commissioner of Banking and Insurance shall convene the public hearing in a timely manner.
c. Within 90 days after the effective date of any amendment to the bylaws, a member authority, whose commissioner or alternate did not approve the amendment, may withdraw from the fund, provided that the withdrawing authority shall remain liable for its share of any claim or expense incurred by the fund during its period of membership.
8. (New section) a. The Commissioner of Banking and Insurance may, in the commissioner's discretion, require the commissioners of any joint insurance fund to file copies of any agreements or contracts entered into by the commissioners of the fund, or any other pertinent documents as the commissioner may deem necessary.
b. The Commissioner of Banking and Insurance may conduct examinations of any joint insurance fund that the commissioner deems necessary. The expense of any such examination shall be borne by the affected fund.
c. The Commissioner of Banking and Insurance shall have the authority to suspend or terminate a joint insurance fund commission's control over any joint insurance fund, or to assume control of the fund, or to direct or take any action on behalf of the fund that the commissioner deems necessary, for good cause, to enable the fund to meet its obligations, cover its expected losses, or to liquidate, rehabilitate, or otherwise modify its affairs. The Commissioner of Banking and Insurance shall take such action if:
(1) the commissioners fail to comply with the rules and regulations promulgated by the Commissioner of Banking and Insurance or with any of the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill);
(2) the commissioners fail to comply with a lawful order of the Commissioner of Banking and Insurance; or
(3) the financial condition of the fund deteriorates to the extent that it causes an adverse effect upon the ability of the joint insurance fund to pay expected losses.
d. Within 180 days after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Commissioner of Banking and Insurance shall promulgate rules and regulations to effectuate the purposes of that act. Such rules and regulations shall include, but not be limited to, the establishment, operation, modification, and dissolution of joint insurance funds established pursuant to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).
9. Section 43 of P.L.2011, c.78 (C.52:14-17.34a) is amended to read as follows:
43. a. As used in this section, "independent State authority" means a public authority, board, commission, corporation, or other agency or instrumentality of the State allocated, in but not of, a principal department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution, or which is not subject to supervision or control by the department in which it is allocated, and a regional authority, but shall not include a college or university.
b. Notwithstanding the provisions of any other law to the contrary, public employees of an independent State authority who are not subject to the provisions of section 40 of P.L.2011, c.78 (C.52:14-17.28d) shall contribute, through the withholding of the contribution from the pay, salary, or other compensation or from the monthly retirement allowance, toward the cost of health care benefits coverage for the employee and any dependent provided by the authority during active service and in retirement in an amount that shall be determined as closely as possible in accordance with sections 39 and 40 of P.L.2011, c.78 (C.52:14-17.28c and C.52:14-17.28d), unless the provisions of subsection c. of this section apply.
Once those employees are subjected to the contribution requirements set forth in this section, the public employers and public employees shall be bound by this act, P.L.2011, c.78, to apply the contribution levels set forth in section 39 of this act until all affected employees are contributing the full amount of the contribution, as determined by the implementation schedule set forth in subsection a. of section 40 of this act. Notwithstanding the expiration date set forth in section 83 of this act, P.L.2011, c.78, or the expiration date of any successor agreements, the parties shall be bound to apply the requirements of this paragraph until they have reached the full implementation of the schedule set forth in subsection a. of section 40 of this act.
c. An independent State authority may enter into a joint insurance fund pursuant to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) to provide health care benefits, including prescription drug benefits and other health care benefits, and may provide through such agreement for an amount of employee or retiree contributions as a cost share or premium share that is other than the percentage required under subsection b. of this section.
(cf: P.L.2011, c.78, s.43)
10. This act shall take effect immediately, but no joint insurance fund shall be established prior to the date occurring 180 days following enactment.
STATEMENT
This bill permits an independent State authority to agree to join with any other independent State authority to establish a joint insurance fund. Under the bill, independent State authorities may establish a joint insurance fund to insure against any loss or damage to property owned by an authority and against loss, damage, or liability resulting from the use or operation of property owned or controlled by an authority or from the negligence of an authority's agents. A joint insurance fund may also insure against bodily injury and property damage claims arising from environmental impairment liability. Independent State authorities may also use a joint insurance fund to provide workers' compensation insurance, health insurance, and group term life insurance to an authority's employees and their dependents.
Under the bill, a board of commissioners would administer the joint insurance fund. The governing body of each participating independent State authority would appoint a commissioner and an alternative commissioner to serve on the board of commissioners. If the total number of member authorities in a joint insurance fund exceeds seven, then the commissioners will annually meet to select an odd number of commissioners, not to exceed seven, to serve as the executive committee of the fund. The executive committee would exercise the full power and authority of the commission.
The bill empowers the commissioners to employ necessary clerical assistants, make investments that advance the purposes of the bill, adopt rules and regulations for the control and investment of the fund, and delegate any of the functions, powers, and duties relating to the investment and reinvestment of funds to an investment or asset manager. The bill requires the commissioners to prepare and, after the approval of the governing body of each participating independent State authority, adopt bylaws for the joint insurance fund. In addition, the commissioners must prepare, or cause to be prepared, a plan of risk management for the joint insurance fund. The commissioners may amend the bylaws and plan of risk management of the fund under certain conditions.
Under the bill, the commissioners may transfer moneys held in the fund to the Director of the Division of Investment in the Department of the Treasury for investment on behalf of the fund, pursuant to the written directions of the commissioners. The bill prohibits the commissioners from withdrawing moneys transferred to the director for investment, except pursuant to the written directions of the commissioners, upon withdrawal or expulsion of a member authority from the fund, upon termination of the fund, or for the payment of claims, administrative expenses, or member dividends.
The bill provides the Commissioner of Banking and Insurance with the authority to monitor joint insurance funds established by independent State authorities. Under the bill, no joint insurance fund can begin providing insurance coverage to its member authorities until the Commissioner of Banking and Insurance has approved its bylaws and plan of risk management. As a condition of approval, the Commissioner of Banking and Insurance may require modification of any bylaws or plan of risk management. The commissioners must also submit amendments to its bylaws and plan of risk management to the Commissioner of Banking and Insurance for approval.
The insurance fund commissioners or the executive board thereof, as the case may be, must provide an annual audit, conducted by an independent certified public accountant, to the Commissioner of Banking and Insurance. The Commissioner of Banking and Insurance has discretion to require the commissioners of any joint insurance fund to file copies of any agreements or contracts entered into by the commissioners of the fund, or any other pertinent documents as the Commissioner of Banking and Insurance may deem necessary. The Commissioner of Banking and Insurance may conduct examinations of any joint insurance fund. Furthermore, the bill provides the Commissioner of Banking and Insurance the authority to suspend or terminate a joint insurance fund commission's control over any joint insurance fund and the ability to assume control of the insurance fund, for good cause, if the commissioners mismanage the fund.
