September 14, 2005, Introduced by Reps. Taub, Marleau, Elsenheimer, Amos, Garfield, Hune, Gaffney, Sheen, David Law, Vander Veen, Stakoe, Hildenbrand, Nofs, Drolet, Hummel, Emmons, Shaffer and Pavlov and referred to the Committee on Insurance.
A bill to amend 1951 PA 35, entitled
"An act to authorize intergovernmental contracts between municipal
corporations; to authorize any municipal corporation to contract
with any person or any municipal corporation to furnish any lawful
municipal service to property outside the corporate limits of the
first municipal corporation for a consideration; to prescribe
certain penalties; to authorize contracts between municipal
corporations and with certain nonprofit public transportation
corporations to form group self-insurance pools; and to prescribe
conditions for the performance of those contracts,"
by amending the title and sections 1, 5, 7, 7a, 10, and 12 (MCL
124.1, 124.5, 124.7, 124.7a, 124.10, and 124.12), the title and
section 7 as amended and section 7a as added by 1988 PA 36, section
1 as amended by 1996 PA 289, section 5 as amended by 1999 PA 83,
and sections 10 and 12 as added by 1982 PA 138.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to authorize intergovernmental contracts between
municipal corporations; to authorize any municipal corporation to
contract with any person or any municipal corporation to furnish
any lawful municipal service to property outside the corporate
limits of the first municipal corporation for a consideration; to
prescribe
certain penalties; to authorize contracts between among
municipal
corporations, and with certain nonprofit public
transportation corporations, and nonprofit corporations to form
group self-insurance pools; and to prescribe conditions for the
performance of those contracts.
Sec. 1. As used in this act:
(a) "Municipal corporation" means a county, charter county,
county road commission, township, charter township, city, village,
school district, intermediate school district, community college
district, metropolitan district, court district, or public
authority, or
a drainage district as defined in established
under
the drain code of 1956, Act
No. 40 of the Public Acts of
1956,
being sections 280.1 to 280.630 of the Michigan Compiled Laws
1956 PA 40, MCL 280.1 to 280.630, or any other local governmental
authority or local agency with power to enter into contractual
undertakings. For purposes of sections 5 to 12b, "municipal
corporation" includes a public transportation corporation.
(b) "Nonprofit corporation" means that term as defined in
section 108 of the nonprofit corporation act, 1982 PA 162, MCL
450.2108.
(c) "Pool member" means a municipal corporation or nonprofit
corporation that is a participant in a group self-insurance pool
formed under section 5.
(d) (b)
"Public transportation corporation" means
a
nonprofit
corporation organized pursuant to the nonprofit
corporation
act, Act No. 162 of the Public Acts of 1982, being
sections
450.2101 to 450.3192 of the Michigan Compiled Laws, to
which 1 of the following applies:
(i) The primary purpose of the nonprofit corporation is
providing public transportation services.
(ii) The nonprofit corporation receives funding from the
specialized
services assistance program under section 10e of Act
No.
51 of the Public Acts of 1951, being section 247.660e of the
Michigan
Compiled Laws 1951 PA 51,
MCL 247.660e.
(e) (c)
"Public transportation" means that term as
defined
in
section 10c of Act No. 51 of the Public Acts of 1951, being
section
247.660c of the Michigan Compiled Laws 1951 PA 51, MCL
247.660c.
Sec. 5. (1) Notwithstanding any other provision of law to the
contrary, any 2 or more municipal corporations, by
intergovernmental contract, any 2 or more nonprofit corporations by
contract, or any combination of 2 or more municipal corporations
and nonprofit corporations by contract may form a group self-
insurance pool to provide for joint or cooperative action relative
to their financial and administrative resources for the purpose of
providing to
the participating municipal corporations risk
management and coverage for pool members and employees of pool
members, for acts or omissions arising out of the scope of their
employment, including any or all of the following:
(a) Casualty insurance, including general and professional
liability coverage.
(b) Property insurance, including marine insurance and inland
navigation and transportation insurance coverage.
(c) Automobile insurance, including motor vehicle liability
insurance coverage and security for motor vehicles owned or
operated, as required by section 3101 of the insurance code of
1956, 1956 PA 218, MCL 500.3101, and protection against other
liability and loss associated with the ownership of motor vehicles.
(d) Surety and fidelity insurance coverage.
(e) Umbrella and excess insurance coverages.
(2) Except as otherwise provided in this subsection, a group
self-insurance pool may not provide for hospital, medical,
surgical,
or dental benefits to the employees of the member
municipalities
in the pool
members except when those benefits
arise from the obligations and responsibilities of the pool in
providing automobile insurance coverage, including motor vehicle
liability insurance coverage and security for motor vehicles owned
or operated, as required by section 3101 of the insurance code of
1956, 1956 PA 218, MCL 500.3101, and protection against other
liability and loss associated with the ownership of motor vehicles.
This subsection does not preclude municipal corporations from
forming a multiple employer welfare arrangement under chapter 70 of
the insurance code of 1956, 1956 PA 218, MCL 500.7001 to 500.7090,
for hospital, medical, surgical, or dental benefits.
(3) A group self-insurance pool may assume, cede, and sell
risk for coverages set forth in subsection (1). If a group self-
insurance pool obtains reinsurance, the reinsurance contract shall
be made available to the commissioner upon request. If the
reinsurance contract is not available to the group self-insurance
pool, the group self-insurance pool shall provide the commissioner
with written documentation of coverage as is requested by the
commissioner.
(4) A group self-insurance pool, for the purposes of carrying
on the business of the group self-insurance pool whether or not a
body corporate, shall have the power to sue and be sued; to make
contracts; to hold and dispose of real and personal property; and
to borrow money, contract debts, and pledge assets in the name of
the group self-insurance pool.
(5) In addition to any other powers granted by this act, the
power to enter into intergovernmental contracts and other contracts
under
this section specifically includes the power to establish
the
a group self-insurance pool as a separate legal or
administrative entity for purposes of effectuating group self-
insurance pool agreements.
(6)
The legislature hereby finds and determines that
insurance protection is essential to the proper functioning of
municipal corporations; that the resources of municipal
corporations are burdened by the securing of insurance protection
through standards carriers; that proper risk management requires
spreading risk to minimize fluctuation in insurance needs; and
that, therefore, all contributions of financial and administrative
resources made by a municipal corporation pursuant to an
intergovernmental contract authorized under this act are made for a
public and governmental purpose, and that those contributions
benefit each contributing municipal corporation.
(7) Two
or more municipal Municipal corporations
and
nonprofit corporations shall not form a group self-insurance pool
to provide the coverages described in subsection (1) other than
pursuant to sections 5 to 12b.
Sec. 7. Any intergovernmental contract or other contract
entered into under section 5 for the purpose of establishing a
group self-insurance pool shall provide:
(a) A financial plan setting forth in general terms:
(i) The insurance coverages to be offered by the group self-
insurance pool, applicable deductible levels, and the maximum level
of claims which the pool will self-insure.
(ii) Subject to section 7a, the amount of cash reserves to be
set aside for the payment of claims.
(iii) The amount of insurance to be purchased by the pool to
provide coverage over and above the claims which are not to be
satisfied directly from the pool's resources.
(iv) Subject to section 7a, the amount of aggregate excess
insurance coverage to be maintained or the amount of the deposit of
unimpaired surplus to be maintained with the state treasurer, which
aggregate excess insurance or deposit shall be used in the event
that the group self-insurance pool's resources are exhausted in a
given fiscal period. The aggregate excess insurance or deposit or
combination of aggregate excess insurance and deposit shall be, at
a minimum, in the amount of $5,000,000.00 unless the commissioner
determines a lesser amount of aggregate excess insurance would be
adequate.
(b) A plan of management which provides for all of the
following:
(i) The means of establishing the governing authority of the
pool.
(ii) The responsibility of the governing authority with regard
to fixing contributions to the pool, maintaining reserves, levying
and collecting assessments for deficiencies, disposing of
surpluses, and administering the pool in the event of termination
or insolvency.
(iii) The basis upon which new members may be admitted to, and
existing members may leave, the pool.
(iv) The identification of funds and reserves by exposure
areas.
(v) Other provisions necessary or desirable for the operation
of the pool.
(c) For election by pool members of a governing authority,
which shall be a board of directors for the pool, a majority of
whom shall be elected or appointed officers of pool members.
Sec.
7a. (1) When 2 or more municipal corporations have
formed
a group self-insurance pool by
an intergovernmental
contract
is formed pursuant to section 5, the group self-insurance
pool shall immediately submit a copy of the intergovernmental
contract or other contract establishing the pool to the
commissioner of insurance. The commissioner of insurance shall
review it for compliance with this act.
(2) A copy of each coverage document form issued by the pool
shall be filed with the commissioner of insurance.
(3) Each group self-insurance pool shall maintain aggregate
excess insurance or a deposit with the state treasurer of
unimpaired surplus which aggregate excess insurance or deposit
shall be used in the event that the pool's resources are exhausted
in a given fiscal period. The aggregate excess insurance or
deposit, or combination of aggregate excess insurance and deposit
shall be, at a minimum, in the amount of $5,000,000.00 unless the
commissioner determines a lesser amount of aggregate excess
insurance
would be adequate. A The
pool shall file a copy of the
aggregate
excess insurance contract obtained by
a group self-
insurance
the pool pursuant to under this section shall
be
filed
with the commissioner of insurance who shall review
it for
compliance with this act.
(4) A group self-insurance pool shall set aside cash reserves
that are adequate for the payment of claims.
Sec. 10. The provisions of any statute or charter requiring a
public official to post bond or obtain a surety bond, the premium
on which may lawfully be paid by a public agency of this state, may
be satisfied with surety or fidelity insurance coverage furnished
by a group self-insurance pool organized under this act, including
any deductible amount or other portion self-insured by the public
agency itself if the pool includes 1 or more municipal corporations
among its members.
Sec. 12. (1) Information regarding that portion of the funds
or
liability reserve of a pool established for purposes of
satisfying
a specific claim or cause of action
shall be by a
group self-insurance pool that is a public body subject to the
freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, is
exempt
from disclosure pursuant to under section 13 of Act
No.
442
of the Public Acts of 1976, as amended, being section 15.243 of
the
Michigan Compiled Laws that
act, MCL 15.243.
(2) Notwithstanding any provisions to the contrary contained
in any public disclosure act or statute, in a claim or action
against
the state or any group self-insurance pool, a person shall
is
not be entitled
to discover that portion of the funds or
liability reserve established for purposes of satisfying a claim or
cause of action, except that the reserve is discoverable in any
supplemental or ancillary proceeding to enforce a judgment.