Stricken language would be deleted from and underlined language would be added to present law.
*ANS119* 03/17/2025 3:16:34 PM ANS119
State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1821 3
4
By: Representatives Wardlaw, Evans, M. Shepherd, Achor, F. Allen, Beaty Jr., Bentley, M. Brown, Joey 5
Carr, Cavenaugh, Cozart, Crawford, Dalby, Eaves, Eubanks, Gramlich, Hawk, Holcomb, Jean, Maddox, 6
McNair, Milligan, J. Moore, Painter, Pearce, Puryear, J. Richardson, Richmond, Steimel, Vaught, Walker, 7
Warren, D. Whitaker, Wing, Wooldridge, Wooten 8
By: Senators Gilmore, J. Boyd, J. Bryant, B. Davis, J. Dismang, Hester, Hill, Irvin, B. Johnson, J. Petty, 9
Rice, Stone 10
11
For An Act To Be Entitled 12
AN ACT TO CREATE A MORE SUSTAINABLE SYSTEM OF 13
PROPERTY INSURANCE FOR PUBLIC SCHOOLS, STATE -14
SUPPORTED INSTITUTIONS OF HIGHER EDUCATION, AND 15
STATE-OWNED PROPERTY; TO CREATE THE OFFICE OF 16
PROPERTY RISK WITHIN THE DEPARTMENT OF TRANSFORMATION 17
AND SHARED SERVICES; TO AMEND THE PUBLIC ELEMENTARY 18
AND SECONDARY SCHOOL INSURANCE ACT; TO REVISE THE 19
EMPLOYEE BENEFITS DIVISION OVERSIGHT SUBCOMMITTEE; TO 20
AMEND THE ARKANSAS MULTI -AGENCY INSURANCE TRUST FUND 21
ACT; TO COMBINE PUBLIC ELEMENTARY AND SECONDARY 22
SCHOOLS WITH STATE-SUPPORTED INSTITUTIONS OF HIGHER 23
EDUCATION AND STATE-OWNED PROPERTY UNDER A SINGLE 24
PROGRAM TO ENSURE PROPER VALUATION FOR PROPERTY 25
INSURANCE PURPOSES; TO CREATE THE STATE CAPTIVE 26
INSURANCE PROGRAM ACT; TO PROHIBIT THE USE OF PUBLIC 27
ADJUSTING IN PROPERTY INSURANCE CLAIMS; TO ALLOW FOR 28
THE CREATION OF A CAPTIVE INSURANCE COMPANY BY THE 29
STATE OF ARKANSAS; TO DECLARE AN EMERGENCY; AND FOR 30
OTHER PURPOSES. 31
32
33
Subtitle 34
TO CREATE A MORE SUSTAINABLE SYSTEM OF 35
PROPERTY INSURANCE FOR PUBLIC SCHOOLS, 36 HB1821
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INSTITUTIONS OF HIGHER EDUCATION, AND 1
STATE-OWNED PROPERTY; AND TO DECLARE AN 2
EMERGENCY. 3
4
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 5
6
SECTION 1. DO NOT CODIFY. Cooperation by state entities with State 7
Captive Insurance Program. 8
The Insurance Commissioner, the State Insurance Department, the 9
Director of the Risk Management Division, the Secretary of the Department of 10
Transformation and Shared Services, the Division of Higher Education, the 11
Commission for Arkansas Public School Academic Facilities and Transportation, 12
the Department of Education, and the State Board of Finance shall cooperate 13
with the State Captive Insurance Program and coordinate to ensure proper and 14
effective coverage requirements and guidelines for all buildings, structures, 15
facilities, and business personal property owned by a public school, a state -16
supported institution of higher education, or the state for the benefit of 17
the State Captive Insurance Program. 18
19
SECTION 2. DO NOT CODIFY. Transitional provisions for property 20
insurance programs transferring to State Captive Insurance Program — Transfer 21
of property insurance programs administered by Director of Risk Management 22
Division. 23
(a) The property insurance programs administered by the Director of 24
the Risk Management Division are transferred to the Department of 25
Transformation and Shared Services, and the programs' authority, duties, 26
functions, records, contracts, personnel, property, and unexpended balances 27
of appropriations, allocations, and other funds, including without limitation 28
the functions of budgeting or purchasing, are transferred to the State 29
Captive Insurance Program as it relates to the property insurance programs 30
only. 31
(b)(1) The Director of the Risk Management Division and the State 32
Insurance Department may continue to carry out the functions of the property 33
insurance programs until such time that the transfer of the property 34
insurance programs of the Department of Commerce - Division of Insurance - 35
Arkansas Multi-Agency Insurance Trust established under the Arkansas Multi -36 HB1821
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Agency Insurance Trust Fund Act, § 25 -35-101 et seq. and the Public School 1
Insurance Trust Fund established under the Public Elementary and Secondary 2
School Insurance Act, § 6 -20-1501 et seq., from the State Insurance 3
Department to the Department of Transformation and Shared Services is 4
complete or November 30, 2025, whichever is earlier. 5
(2) The Secretary of the Department of Transformation and Shared 6
Services may extend the date by rule only for purposes of adjustment and 7
payment of claims, as set out in Section 26 of this act. 8
(c) The Insurance Commissioner and the Director of the Risk Management 9
Division shall cooperate with the State Captive Insurance Program to ensure 10
an efficient and timely transition of operations once the State Captive 11
Insurance Program begins operations to provide coverage for all buildings, 12
structures, facilities, and business personal property owned by a public 13
school, a state-supported institution of higher education, or the state for 14
the benefit of the State Captive Insurance Program. 15
16
SECTION 3. DO NOT CODIFY. Legislative findings and intent. 17
(a) The General Assembly finds that: 18
(1) The property insurance programs for public schools, state -19
supported institutions of higher education, and state -owned properties are in 20
a state of crisis; 21
(2) In 2023, the General Assembly authorized supplemental 22
funding to send to public schools for the purpose of offsetting premium 23
increases for public schools without implementing long -term systemic and 24
structural reforms; 25
(3) In addition to the need for short -term action by the General 26
Assembly to avert the impending premium increases for public schools, the 27
General Assembly must take an active role in crafting a long -term solution to 28
ensure the stability of the property insurance programs for public schools, 29
state-supported institutions of higher education, and state -owned properties; 30
(4) Significant market adjustments in response to natural 31
disasters in this state and in this country have resulted in the need for the 32
General Assembly to restructure and combine the property insurance programs 33
for public schools, state -supported institutions of higher education, and 34
state-owned properties under the State Captive Insurance Program created by 35
this act and to inject additional money into the State Captive Insurance 36 HB1821
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Program to maintain the integrity of the State Captive Insurance Program by 1
offsetting premium increases for public schools, state -supported institutions 2
of higher education, and state -owned properties; 3
(5) The use of public adjusting by certain public schools has 4
caused an increase in property insurance premiums and a lack of viable 5
options on the insurance market for future years; 6
(6) Properties of state -supported institutions of higher 7
education have historically been undervalued, and including state -supported 8
institutions of higher education in the State Captive Insurance Program will 9
provide more attractive options for the State Captive Insurance Program on 10
the insurance market; 11
(7) Properties of state -supported institutions of higher 12
education will need to be reappraised by independent adjusters under the 13
State Captive Insurance Program to ensure proper valuation of properties; 14
(8) The continual evaluation of the State Captive Insurance 15
Program by the General Assembly is critical for: 16
(A) Maximizing the benefits to public schools, state -17
supported institutions of higher education, and the state that are 18
participants in the State Captive Insurance Program; and 19
(B) Maintaining the continued viability of the State 20
Captive Insurance Program; and 21
(9) Accountability and transparency in the operation of the 22
State Captive Insurance Program are vital to a proper evaluation of the State 23
Captive Insurance Program. 24
(b) It is the intent of the General Assembly that: 25
(1) The property insurance programs for public schools, state-26
supported institutions of higher education, and state -owned property are 27
restructured and combined for public schools, state -supported institutions of 28
higher education, and state -owned property under the State Captive Insurance 29
Program; 30
(2) Additional money shall be injected into the State Captive 31
Insurance Program to maintain the integrity of the State Captive Insurance 32
Program by managing risks for public schools, state -supported institutions of 33
higher education, and the state; 34
(3) Any additional funding provided for public schools or state -35
supported institutions of higher education for purposes of property insurance 36 HB1821
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during the Regular Session of the 95th General Assembly be considered a one -1
time infusion of money, not a permanent funding source; 2
(4) Funding will be calculated under the State Captive Insurance 3
Program with meaningful reforms that restore permanent stability and 4
actuarial soundness; 5
(5) The use of public adjusting is prohibited by public schools 6
and state-supported institutions of higher education under the State Captive 7
Insurance Program; and 8
(6) The Insurance Commissioner, the State Insurance Department, 9
the Director of the Risk Management Division, the Secretary of the Department 10
of Transformation and Shared Services, the Division of Higher Education, the 11
Commission for Arkansas Public School Academic Facilities and Transportation, 12
the Department of Education, and the State Board of Finance shall coordinate 13
to ensure proper and effective coverage requirements and guidelines for all 14
buildings, structures, facilities, and business personal property owned by a 15
public school, state -supported institution of higher education, or the state 16
for the benefit of the State Captive Insurance Program. 17
(c) The General Assembly intends this transfer to streamline the 18
delivery of property insurance coverage for all state -owned buildings, public 19
schools and state-supported institutions of higher education to promote 20
stability and fiduciary soundness for all structures covered and potential 21
claims. 22
(d)(1) The property insurance programs of the Department of Commerce - 23
Division of Insurance - Arkansas Multi-Agency Insurance Trust established 24
under the Arkansas Multi -Agency Insurance Trust Fund Act, § 25 -35-101 et seq. 25
and the Public School Insurance Trust Fund established under the Public 26
Elementary and Secondary School Insurance Act, § 6 -20-1501 et seq., shall be 27
transferred by cabinet -level department transfer under § 25 -43-101 et seq., 28
from the Department of Commerce to the Department of Transformation and 29
Shared Services no later than December 1, 2025, to provide for the operation 30
of the State Captive Insurance Program. 31
(2) The Department of Commerce and the Department of 32
Transformation and Shared Services shall coordinate the transfer to coincide 33
with the start date of the State Captive Insurance Program established under 34
§ 25-44-103. 35
(e) The transfer of the statutory authority, powers, duties, 36 HB1821
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functions, records, personnel, property, contracts, and unexpended balances 1
of appropriations, allocations, or other funds shall begin at the direction 2
of the Chief Fiscal Officer of the State in cooperation with the Secretary of 3
the Department of Commerce and the Secretary of the Department of 4
Transformation and Shared Services on July 1, 2025, and shall be fully 5
complete by December 1, 2026, for the establishment of the State Captive 6
Insurance Program. 7
(f) The orders, rules, regulations, directives, or standards in this 8
section shall continue with full force and effect until amended or repealed 9
under authority given by law. 10
(g) The Department of Commerce shall grant access to and provide all 11
information requested by the Department of Transformation and Shared Services 12
to accomplish the transfer of the property insurance coverage from the 13
Arkansas Multi-Agency Insurance Trust Fund and the Public School Insurance 14
Trust Fund and the missions of these programs to the new State Captive 15
Insurance Program. 16
17
SECTION 4. Arkansas Code § 6 -20-1503 is amended to read as follows: 18
6-20-1503. State Insurance Department — Powers and duties regarding 19
cybersecurity risks insurance for public elementary and secondary schools. 20
It shall be the power and duty of the State Insurance Department to: 21
(1) Adopt such rules as may be necessary to provide for the 22
insuring of public elementary and secondary school, education service 23
cooperative, and open -enrollment public charter school property cybersecurity 24
risks insurance within the State of Arkansas; 25
(2) Administer the Public School Insurance Trust Fund; 26
(3) Delegate responsibilities in connection with the 27
administration of this subchapter to the Director of the Risk Management 28
Division and the staff of the department; 29
(4)(A) Establish and administer a program of insurance to cover 30
buildings and contents cybersecurity risks insurance of public school 31
districts, education service cooperatives, and open -enrollment public charter 32
schools of this state that have elected to participate in a multischool 33
insurance program. 34
(B) The programs program shall be in accordance with 35
recognized and established insurance practices; 36 HB1821
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(5) Establish, and from time to time modify, the premium rates 1
to be charged for the various risks; 2
(6) Specify the form for insurance policies and other forms 3
required for the purposes of this subchapter; 4
(7)(A) Purchase insurance in compliance with all state 5
purchasing laws from insurance companies authorized to do business in this 6
state in keeping with recognized principles of good risk management. 7
(B) The director shall prescribe, from time to time, rules 8
for placing and handling the insurance; 9
(8) Employ necessary adjusters, engineers, appraisers, and other 10
personnel required in the administration of this subchapter; 11
(9) Engage in a program of prevention loss control to assist the 12
various public schools in improving and minimizing potential insurance 13
losses; 14
(10)(9) Perform all additional powers and duties necessary to 15
maintain sound insurance underwriting practices recognized by good risk 16
management; 17
(11)(10) Periodically review the status of the fund and the 18
adequacy of insurance premium rates and compare these rates with rates for 19
comparable risks for private insurance companies; 20
(12)(11) Confer with superintendents and boards of directors of 21
school districts, the governing boards of education service cooperatives, and 22
open-enrollment public charter schools concerning insurance practices of the 23
various school districts, education service cooperatives, and open -enrollment 24
public charter schools; 25
(13)(12) Promulgate rules for the administration of the state 26
public school cybersecurity risks insurance program; and 27
(14)(13) Perform other duties that will expedite the operation 28
of the Public Elementary and Secondary School Insurance Program. 29
30
SECTION 5. Arkansas Code § 6 -20-1505 is amended to read as follows: 31
6-20-1505. Information to be furnished. 32
(a) The Director of the Risk Management Division of the State 33
Insurance Department, with the approval of the Insurance Commissioner, shall 34
require school district superintendents, county school supervisors, clerks, 35
or governing boards of the education service cooperatives or open -enrollment 36 HB1821
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public charter schools to furnish the State Insurance Department a complete 1
list showing the location of every school building sixty (60) days before 2
entering the program and upon written request by the department. 3
(b) The department State Insurance Department shall have authority to 4
require each school district, education service cooperative, or open -5
enrollment public charter school to furnish a complete report of its 6
cybersecurity risks insurance program, including the expiration dates of its 7
contracts, a history of losses, or any additional information required by the 8
insurer. 9
10
SECTION 6. Arkansas Code § 6 -20-1506 is amended to read as follows: 11
6-20-1506. Finding of uninsurability — Effect. 12
(a)(1) The State Insurance Department is authorized to maintain an 13
inspection and engineering service and a training program designed to reduce 14
the hazards in public school buildings insured under this program. 15
(2) The department shall have authority to cancel or not renew 16
insurance on any school property if the property is deemed no longer 17
insurable. 18
(3) The department may refuse to insure property insured for 19
cybersecurity risks when it determines that the property does not meet 20
program guidelines for cybersecurity risks insurance coverage . 21
(b) In carrying out its duties pursuant to this section, the The 22
department may request and the affected school district shall provide any 23
information requested for a determination concerning the reasons for the a 24
denial, nonrenewal, or cancellation of cybersecurity risks insurance 25
coverage. 26
27
SECTION 7. Arkansas Code § 6 -20-1508 is amended to read as follows: 28
6-20-1508. Appraisal and payment Payment of losses. 29
(a) In the event of loss of a school district, education service 30
cooperative, or open -enrollment public charter school property under the 31
Public Elementary and Secondary School Insurance Program, the Public School 32
Insurance Trust Fund shall pay the loss as specified in the contract. 33
(b) When an agreement as to the extent of loss or damage cannot be 34
reached between the State Insurance Department and officials having charge of 35
the property, the amount of the loss or damage shall be determined by three 36 HB1821
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(3) appraisers, one (1) to be named by the department, one (1) by the school 1
district, education service cooperative, or open -enrollment public charter 2
school governing board, and a third to be selected by the two (2) appointed 3
appraisers, all of whom shall be disinterested persons and qualified from 4
experience to appraise and value such property. 5
(c) If a third appraiser is not agreed upon within thirty (30) days, 6
the Insurance Commissioner shall have authority to appoint a third appraiser. 7
(d) It shall be the duty of the department to coordinate, facilitate, 8
and expedite details in connection with responsibilities outlined in this 9
section. 10
(e) The department is granted authority to contract for services with 11
licensed real estate brokers in order to expedite and facilitate the proper 12
operation of the program. 13
14
SECTION 8. Arkansas Code § 6 -20-1513 is repealed. 15
6-20-1513. Bond obligations. 16
(a) The State Insurance Department is authorized and directed to meet 17
legal requirements with reference to coverage on buildings as a result of 18
school district, education service cooperative, or open -enrollment public 19
charter school bond obligations. 20
(b) The specific intent of this section is to ensure that policies 21
issued by the Public Elementary and Secondary School Insurance Program 22
include provisions required by existing school district bond contracts. 23
24
SECTION 9. Arkansas Code § 6 -21-114(d) and (e), concerning authorized 25
and required actions of the Commission for Arkansas Public School Academic 26
Facilities and Transportation, is amended to read as follows: 27
(d) The commission shall: 28
(1) Oversee the operations of the Division of Public School 29
Academic Facilities and Transportation; 30
(2)(A) Promulgate rules in consultation with the Insurance 31
Commissioner Department of Transformation and Shared Services to establish 32
property, boiler and machinery, and extended coverage insurance requirements 33
and guidelines for all buildings, structures, facilities, and business 34
personal property owned by a school district. 35
(B) The rules promulgated by the commission under 36 HB1821
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subdivision (d)(2)(A) of this section shall: 1
(i) Attempt to provide the most cost -efficient 2
manner for protecting each school district from loss of or damage to the 3
school district's buildings, structures, facilities, and business personal 4
property; 5
(ii) Require property, boiler and machinery, and 6
extended coverage insurers to have a minimum A.M. Best rating; 7
(iii) Establish bidding requirements and procedures, 8
if applicable to any insurance coverage; and 9
(iv)(a)(iii)(a) Be binding upon each school district 10
for any placement or renewal of insurance coverage after June 1, 2007. 11
(b) The state's financial participation under 12
the Academic Facilities Partnership Program provided by § 6 -20-2507 or the 13
Academic Facilities Catastrophic Program provided by § 6 -20-2508 may be 14
withheld or reduced by the commission if a school district does not comply 15
with the rules promulgated under subdivision (d)(2)(A) of this section; and 16
(iv) Require a public school district to be insured 17
under the State Captive Insurance Program with respect to insurance coverage 18
of the buildings, structures, facilities, and business personal property 19
owned by the public school district in order to be eligible for the state's 20
financial participation under the Academic Facilities Partnership Program 21
under § 6-20-2507 and the Academic Facilities Catastrophic Program under § 6 -22
20-2508; and 23
(3) Appoint all members of the Advisory Committee on Public 24
School Academic Facilities. 25
(e) The commission may: 26
(1) Perform any act and provide for the performance of any 27
function necessary or desirable to carry out the purposes of the Arkansas 28
Public School Academic Facilities Program and any other related program; 29
(2)(A) Adopt, amend, and rescind rules as necessary or desirable 30
for the administration of the Arkansas Public School Academic Facilities 31
Program and any other related program. 32
(B) The commission shall report to the Administrative 33
Rules Subcommittee of the Legislative Council in a manner consistent with § 34
10-3-309 on the adoption, amendment, rescission, or repeal of any proposed 35
rule related to the administration of the Arkansas Public School Academic 36 HB1821
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Facilities Funding Act, § 6 -20-2501 et seq., the Arkansas Public School 1
Academic Facilities Program Act, § 6 -21-801 et seq., or any other related 2
program; 3
(3) Contract with, retain the services of, or designate and fix 4
the compensation of consultants, advisors, architects, engineers, and other 5
independent contractors as may be necessary or desirable to carry out the 6
Arkansas Public School Academic Facilities Program or any related program; 7
and 8
(4) Study and promulgate rules in consultation with the 9
department concerning: 10
(A) The propriety and feasibility of requiring that each 11
school district maintain insurance coverage against loss due to : 12
(i) Earth earth movement; or 13
(ii) The operation of a school district's motor 14
vehicles and buses; and 15
(B) The appropriate amount of insurance coverage under 16
this subdivision (e)(4) ; and 17
(5) Study and promulgate rules in consultation with the 18
Insurance Commissioner concerning: 19
(A) The propriety and feasibility of requiring that each 20
school district maintain insurance coverage against loss due to the operation 21
of a school district's motor vehicles and buses; and 22
(B) The appropriate amount of insurance coverage under 23
this subdivision (e)(5) . 24
25
SECTION 10. Arkansas Code § 6 -21-806 is amended to read as follows: 26
6-21-806. Academic Facilities Master Plan Program — School districts. 27
(a) The Academic Facilities Master Plan Program shall require each 28
school district to: 29
(1) Develop a six-year districtwide facilities master plan that 30
shall be approved by the school district's board of directors for submission 31
to and approval by the Division of Public School Academic Facilities and 32
Transportation and the Department of Transformation and Shared Services ; 33
(2) Base its facilities master plan on the provisions: 34
(A) Provisions of the Arkansas Public School Academic 35
Facility Manual as adopted by the Commission for Arkansas Public School 36 HB1821
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Academic Facilities and Transportation , on priorities; 1
(B) Priorities indicated by statewide assessment , on 2
priorities; 3
(C) Priorities established by the division statewide 4
facility needs priority list , and on other; 5
(D) Rules promulgated by the department as they relate to 6
requirements associated with public school district schedules for 7
maintenance, repair, and renovation activities in public school academic and 8
nonacademic facilities; and 9
(E) Other pertinent data specific to the needs of the 10
school district with regard to academic facilities and equipment; 11
(3) Present a draft of the school district's facilities master 12
plan in a public hearing in the same locality as the school district and take 13
public comments; 14
(4) Submit evidence of the school district's insurance coverage 15
to the division and the department, including coverage amounts, types of 16
coverage, identification of buildings covered, policy renewal dates, and all 17
riders; 18
(5) Submit the school district's facilities master plan with a 19
summary of comments made at public hearing to the division and the department 20
by February 1 of each even -numbered year; 21
(6) Submit a report to the division and the department by 22
February 1 of each odd -numbered year that includes a description of all 23
projects completed in the school district since the submission of the school 24
district's most recent facilities master plan, the school district's current 25
enrollment projections, new or continuing needs of the school district with 26
regard to academic facilities and equipment, and an accounting of any changes 27
in the school district's insurance coverage from the most recent submission; 28
and 29
(7)(A) Submit a report to the division and the department by 30
February 1 of each year that identifies: 31
(i) All unused or underutilized public school 32
facilities in the school district; and 33
(ii) The unused or underutilized public school 34
facilities, if any, that are designated in the district's facilities master 35
plan to be reused, renovated, or demolished as part of a specific committed 36 HB1821
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project or planned new construction project. 1
(B)(i) The division shall identify a public school 2
facility or other real property as an unused or underutilized public school 3
facility if the school district fails to identify in the report the public 4
school facility or other real property. 5
(ii) A school district may appeal an identification 6
made by the division under subdivision (a)(7)(B)(i) of this section to the 7
commission. 8
(b) A facilities master plan shall include, at a minimum, the 9
following: 10
(1) A schedule of custodial activities for each public school 11
facility used by a school district; 12
(2)(A) A schedule of maintenance, repair, and renovation 13
activities for each public school facility used by a school district , that 14
shall be based on the rules promulgated by the department . 15
(B) The schedule shall distinguish between work associated 16
with academic facilities and work associated with nonacademic public school 17
facilities; 18
(3)(A) Documentation that describes preventive maintenance work 19
for each public school facility as required by rules promulgated by the 20
department and identifies the completion date of the work. 21
(B) The documentation shall distinguish between preventive 22
maintenance work associated with academic facilities and preventive 23
maintenance work associated with nonacademic public school facilities; 24
(4)(A) Annual expenditures of the school district for all 25
custodial, maintenance, repair, and renovation activities in the school 26
district. 27
(B) The section of the facilities master plan pertaining 28
to the annual expenditures under subdivision (b)(4)(A) of this section shall 29
distinguish between expenditures associated with academic facilities and 30
expenditures associated with nonacademic public school facilities; 31
(5) A projected replacement schedule for major building systems 32
in each public school facility , that shall be based on the rules promulgated 33
by the department; 34
(6) Identification of issues with regard to public school 35
facility and program access to individuals with disabilities and, if 36 HB1821
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necessary, proposed methods for improving access; 1
(7)(A) Identification of committed projects within the school 2
district that includes, as applicable, a breakdown of the portion of each 3
project into maintenance, repair, and renovation activities and new 4
construction activities , that shall be based on the rules promulgated by the 5
department. 6
(B) The portion of a committed project pertaining to 7
maintenance, repair, and renovation activities shall identify, as applicable, 8
maintenance, repair, and renovation activities associated with academic 9
facilities and maintenance, repair, and renovation activities associated with 10
nonacademic public school facilities; 11
(8) Annual expenditures of the school district for capital 12
outlay; 13
(9) A description of planned new construction projects with cost 14
estimates for each public school facility within the school district and 15
needs prioritized as follows: 16
(A) Immediate needs that the school district intends to 17
address within three (3) years following the submission of the facilities 18
master plan; and 19
(B) Long-term needs that the school district intends to 20
address within the four (4) to six (6) years following the submission of the 21
facilities master plan; 22
(10) Evidence of the school district's insurance coverage, 23
including coverage amounts, types of coverage, identification of public 24
school facilities covered, policy renewal dates, and all riders; and 25
(11) An update in a format prescribed by the division of any new 26
public school facilities, as defined in § 6 -21-803, constructed since the 27
last master plan submission, including individual room types and sizes. 28
(c) A consultation meeting between representatives of the school 29
district and members of the division and the department to discuss the 30
development of the school district's facilities master plan shall be held 31
upon request of the school district. 32
(d) The division and the department shall review and upon all 33
requirements' requirements being met approve a school district's facilities 34
master plan no later than September 1 of each even -numbered year and shall 35
notify a school district no later than May 1 of each odd -numbered year 36 HB1821
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whether the school district's application for state financial participation 1
during the upcoming biennium in an eligible new construction project has been 2
approved. 3
(e)(1) A school district may amend its facilities master plans at any 4
time during the six-year cycle specified in § 6 -21-803. 5
(2) An amendment may be submitted to the division and the 6
department out of the regular even -numbered year cycle if the school 7
district: 8
(A) Has encountered: 9
(i) A major enrollment change; 10
(ii) A major curriculum change; 11
(iii) A major disaster; or 12
(iv) An unforeseen occurrence; or 13
(B)(i) Has begun or completed a self -funded construction 14
project over which the division has only review authority. 15
(ii) An amendment submitted under subdivision 16
(e)(2)(B)(i) of this section may be submitted in the form of an appendix to 17
the existing school district facilities master plan. 18
(f) In addition to the rules promulgated by the commission as required 19
by § 6-21-804, the department, in consultation with the division, shall 20
promulgate rules regarding the following without limitation: 21
(1) The requirements associated with public school district 22
schedules for maintenance, repair, and renovation activities in public school 23
academic and nonacademic facilities, that shall be included in the Public 24
School Facilities Custodial, Maintenance, Repair, and Renovation Manual 25
required by § 6-21-808; 26
(2) Insurance coverage requirements, including without 27
limitation: 28
(A) Insurance coverage amounts; and 29
(B) Types of insurance coverage; 30
(3) Preventive maintenance work requirements for each public 31
school academic and nonacademic facility; 32
(4) Projected replacement schedule requirements for major 33
building systems in each public school academic and nonacademic facility; and 34
(5) A depreciation schedule for roofs and heating, ventilation, 35
and air conditioning systems. 36 HB1821
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1
SECTION 11. Arkansas Code § 10 -3-320 is amended to read as follows: 2
10-3-320. Employee Benefits Division State Insurance Programs 3
Oversight Subcommittee — Definition. 4
(a) The Legislative Council shall establish by rule the Employee 5
Benefits Division State Insurance Programs Oversight Subcommittee, which 6
shall have oversight of all decisions of the State Board of Finance related 7
to the State and Public School Life and Health Insurance Program and the 8
State Captive Insurance Program . 9
(b) The following decisions of the board pertaining to the program 10
State and Public School Life and Health Insurance Program or the State 11
Captive Insurance Program shall be referred to the Employee Benefits Division 12
State Insurance Programs Oversight Subcommittee: 13
(1)(A) A new or significantly modified cost -containment measure. 14
(B) As used in this subdivision (b)(1), “cost -containment 15
measure” means a process or practice of controlling and managing expenses of 16
the program State and Public School Life and Health Insurance Program or the 17
State Captive Insurance Program by reducing or limiting the amount of 18
spending required to administer the program State and Public School Life and 19
Health Insurance Program or the State Captive Insurance Program and remain 20
within specific, preplanned budgetary constraints; 21
(2) Any change in plan options offered under the : 22
(A) program State and Public School Life and Health 23
Insurance Program for state employees or public school employees ; or 24
(B) State Captive Insurance Program for property owned by 25
public schools, state -supported institutions of higher education, or the 26
state; 27
(3) Potential funding changes to the program State and Public 28
School Life and Health Insurance Program or the State Captive Insurance 29
Program; 30
(4) Any premium increases or decreases over the previous plan 31
year; 32
(5) Any concern involving the reserve balance for state 33
employees or public school employees the State and Public School Life and 34
Health Insurance Program or the State Captive Insurance Program ; 35
(6) Changes to the four -year projections for the program State 36 HB1821
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and Public School Life and Health Insurance Program or the State Captive 1
Insurance Program; 2
(7) Changes that would limit, eliminate, or increase benefits of 3
plan options offered under the program State and Public School Life and 4
Health Insurance Program or the State Captive Insurance Program and the 5
effect these changes would have on the fiscal viability of the program State 6
and Public School Life and Health Insurance Program or the State Captive 7
Insurance Program, including the reserve balance for state employees or 8
public school employees the State and Public School Life and Health Insurance 9
Program or the State Captive Insurance Program ; 10
(8) Changes that would limit, eliminate, or increase eligibility 11
requirements for the program State and Public School Life and Health 12
Insurance Program or the State Captive Insurance Program ; 13
(9) Vendor issues or changes in vendors from the previous plan 14
year; 15
(10) Proposed contracts or changes in contracts from the 16
previous plan year; 17
(11) Any change in consultants from the previous plan year; 18
(12) Rules promulgated by the board , or by the Employee Benefits 19
Division, or by the Secretary of the Department of Transformation and Shared 20
Services regarding the implementation, administration, or enforcement of the 21
program State and Public School Life and Health Insurance Program or the 22
State Captive Insurance Program ; and 23
(13) Such other matters related to the program State and Public 24
School Life and Health Insurance Program or the State Captive Insurance 25
Program as the Employee Benefits Division State Insurance Programs Oversight 26
Subcommittee considers necessary to perform its oversight of all matters 27
related to the program State and Public School Life and Health Insurance 28
Program or the State Captive Insurance Program . 29
(c)(1) Except as provided in subdivision (c)(2) of this section, if a 30
matter referred to the Employee Benefits Division State Insurance Programs 31
Oversight Subcommittee under subsection (b) of this section would otherwise 32
require review or approval, or both, by a subcommittee of the Legislative 33
Council, the Employee Benefits Division State Insurance Programs Oversight 34
Subcommittee shall serve as the subcommittee of the Legislative Council that 35
performs the required review or approval, or both, of the matter. 36 HB1821
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(2) Proposed rules submitted to the Employee Benefits Division 1
State Insurance Programs Oversight Subcommittee under this section are not 2
subject to approval by the Employee Benefits Division State Insurance 3
Programs Oversight Subcommittee but are submitted for review purposes only. 4
(d)(1) During a regular, fiscal, or extraordinary session of the 5
General Assembly, the Joint Budget Committee shall perform the functions 6
assigned to the Employee Benefits Division State Insurance Programs Oversight 7
Subcommittee. 8
(2) The Joint Budget Committee may establish a subcommittee to 9
perform the functions of the Employee Benefits Division State Insurance 10
Programs Oversight Subcommittee that are assigned to the Joint Budget 11
Committee under subdivision (d)(1) of this section. 12
13
SECTION 12. Arkansas Code Title 19, Chapter 3, Subchapter 7, is 14
amended to add an additional section to read as follows: 15
19-3-706. Authority to establish and maintain captive insurance 16
company. 17
(a) With the approval of the State Board of Finance under this section 18
and notwithstanding § 23 -63-1625, the Treasurer of State may establish, and 19
the Secretary of the Department of Transformation and Shared Services shall 20
maintain, a captive insurance company as defined in § 23 -63-1601 to maintain 21
the State Captive Insurance Program under the State Captive Insurance Program 22
Act, § 25-44-101 et seq. 23
(b) The captive insurance company described under subsection (a) of 24
this section is: 25
(1) Subject to § 23-63-1601 et seq. and other applicable laws 26
and rules, whether or not adequate insurance markets are available to cover 27
the risks, hazards, and liabilities described in this section; 28
(2) A separate legal entity, owned and controlled by the state, 29
and shall insure only the losses, exposures, and risks of entities that are 30
subject to insurance and self -insurance requirements under state law, 31
including without limitation executive, legislative, and judicial branch 32
state agencies, public schools, and state -supported institutions of higher 33
education; and 34
(3) Administratively attached to the Department of 35
Transformation and Shared Services for the purposes of administration and 36 HB1821
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personnel. 1
(c) Through the establishment of the captive insurance company 2
described under subsection (a) of this section, the board shall: 3
(1) Annually review and approve the captive insurance company's 4
actuarial plan; 5
(2) Periodically determine, reevaluate, and revise: 6
(A) The potential losses, exposures, and risks that will 7
be insured through the captive insurance company; 8
(B) The nature and scope of insurance coverage or 9
coverages to be provided through the captive insurance company; 10
(C) The method by which coverage or coverages are to be 11
extended and contributions are to be paid and collected, including without 12
limitation premiums and assessments; 13
(D) The amount of the exposure for each line of insurance 14
coverage as well as the premium amounts for each entity, including without 15
limitation public schools, state -supported institutions of higher education, 16
and the state; 17
(E) A process through which premiums may be collected 18
directly from each entity; and 19
(F)(i) The initial and continuing capital requirements to 20
form and maintain the captive insurance company, including without limitation 21
the amount and funding source for the initial and continuing capital. 22
(ii) Initial or continuing capital may be funded by 23
general revenues from the State Captive Insurance Program Trust Fund or other 24
sources allowable under applicable laws and rules; 25
(3)(A) Establish an investment policy for the investment and 26
reinvestment of capital, premiums, and other funds and assets of the captive 27
insurance company. 28
(B) The investment policy described under subdivision 29
(c)(3)(A) of this section may authorize the funds and assets to be invested 30
in a security, investment, or investment interest that is not otherwise 31
prohibited by Arkansas Constitution, Article 12, § 5. 32
(C) Collateral that is required to secure an investment or 33
investment interest authorized in the investment policy may be in the form of 34
a security, investment, or investment interest in which the funds and assets 35
of the captive insurance company may be directly invested, including cash; 36 HB1821
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(4) Approve regulatory filings to be made by the state on behalf 1
of the captive insurance company in compliance with applicable laws and 2
rules; 3
(5)(A) Delegate to the secretary the day-to-day operations and 4
responsibilities of the captive insurance company and promulgation of rules 5
to implement this section. 6
(B) The secretary shall implement the board directives and 7
exercise the state's powers, duties, and responsibilities contained in this 8
section to implement the captive insurance company. 9
(C) The secretary may assign duties and responsibilities 10
to the secretary's staff or private vendors and contractors, as the secretary 11
deems necessary and proper, and may consult with professionals as necessary 12
about the administration of the captive insurance company. 13
(D) The secretary may also establish, implement, and adopt 14
policies, guidelines, and operating procedures under this section and the 15
board's delegation; 16
(6) Approve the dissolution of the captive insurance company 17
with the prior approval of the Legislative Council or, if the General 18
Assembly is in session, the Joint Budget Committee; and 19
(7) Perform other duties or actions necessary for the effective 20
implementation, operation, and administration of the captive insurance 21
company. 22
23
SECTION 13. Arkansas Code § 19 -5-1134 is amended to read as follows: 24
19-5-1134. Public School Insurance Trust Fund. 25
(a) There is established on the books of the Treasurer of State, the 26
Auditor of State, and the Chief Fiscal Officer of the State a trust fund to 27
be known as the “Public School Insurance Trust Fund”. 28
(b) The Public School Insurance Trust Fund shall consist of: 29
(1) A Permanent Insurance Reserve Fund, insurance premiums, 30
adjustments, earnings, interest income, and the like, as provided by the 31
Public Elementary and Secondary School Insurance Act, § 6 -20-1501 et seq., 32
and the School Motor Vehicle Insurance Act, § 6 -21-701 et seq.; and 33
(2) All funds transferred from the former Public Elementary and 34
Secondary School Insurance Fund established under §§ 6 -20-1510 [repealed] and 35
19-5-908 [repealed]; and 36 HB1821
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(3) All funds transferred from the former School Vehicle 1
Insurance Reserve Trust Fund established under § § 6-21-710 and 19-5-981 2
[repealed]. 3
(c)(1) The Public School Insurance Trust Fund shall be used for the 4
operation, maintenance, and execution of the Public Elementary and Secondary 5
School Insurance Program under the Public Elementary and Secondary School 6
Insurance Act, § 6-20-1501 et seq., and the Public School Motor Vehicle 7
Insurance Program under the School Motor Vehicle Insurance Act, § 6 -21-701 et 8
seq. 9
(2) No money shall be appropriated from the Public School 10
Insurance Trust Fund for any purpose except for the use and benefit of the 11
Public Elementary and Secondary School Insurance Program and the Public 12
School Motor Vehicle Insurance Program. 13
(3) All funds received by the State Insurance Department in the 14
administration of the Public Elementary and Secondary School Insurance 15
Program and the Public School Motor Vehicle Insurance Program as premiums, 16
adjustments, earnings, and the like: 17
(A) Shall be used for the following purposes, listed in a 18
descending order of priority: 19
(i) To defray administrative costs; 20
(ii) To pay claims; and 21
(iii) To maintain the Public School Insurance Trust 22
Fund; and 23
(B) May be invested and reinvested as the Insurance 24
Commissioner may determine. 25
(4) Moneys invested and interest earned thereon shall be 26
administered as program funds. 27
(5) All moneys deposited into the Public School Insurance Trust 28
Fund shall not be subject to any deduction, tax, levy, or any other type of 29
assessment. 30
(d) The initial loan from the former Public Elementary and Secondary 31
School Insurance Fund as established by the Public Elementary and Secondary 32
School Insurance Act, § 6 -20-1501 et seq., of one million five hundred 33
thousand dollars ($1,500,000) to fund the former School Vehicle Insurance 34
Reserve Trust Fund established under the School Motor Vehicle Insurance Act, 35
§ 6-21-701 et seq., is cancelled. 36 HB1821
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1
SECTION 14. Arkansas Code Title 19, Chapter 5, Subchapter 11, is 2
amended to add an additional section to read as follows: 3
19-5-1161. State Captive Insurance Program Trust Fund. 4
(a) There is created on the books of the Treasurer of State, the 5
Auditor of State, and the Chief Fiscal Officer of the State a trust fund to 6
be known as the "State Captive Insurance Program Trust Fund". 7
(b) The State Captive Insurance Program Trust Fund shall consist of 8
all funds transferred by the Department of Transformation and Shared Services 9
from the captive insurance company established under § 19 -3-706 and any other 10
funds provided by law. 11
(c)(1) The State Captive Insurance Program Trust Fund shall be 12
administered by and disbursed at the direction of the state. 13
(2) Moneys shall not be appropriated from the State Captive 14
Insurance Program Trust Fund for any purpose except for: 15
(A) The use and benefit of the captive insurance company 16
established under § 19 -3-706 for claims; 17
(B) Expenses of the captive insurance company established 18
under § 19-3-706, including without limitation actuarial fees, consultant 19
expenses, operating expenses, and service contract fees; and 20
(C) The personnel costs for the Department of 21
Transformation and Shared Services to support the captive insurance company 22
established under § 19 -3-706. 23
(3) All moneys deposited into the State Captive Insurance 24
Program Trust Fund shall not be subject to any deduction, tax, levy, or any 25
other type of assessment. 26
(d)(1) There is created a reserve balance sub -fund in the State 27
Captive Insurance Program Trust Fund as authorized under § 25 -44-105 with all 28
requirements as defined in that section. 29
(2) Funding allocated for operations and claims for the State 30
Captive Insurance Program shall not be considered part of the net legal 31
balance of the reserve balance sub -fund as described in § 25 -44-105. 32
33
SECTION 15. Arkansas Code § 23 -63-1614, concerning the premium tax 34
levied on captive insurers, is amended to add an additional subsection to 35
read as follows: 36 HB1821
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(k) This section does not apply to a captive insurance company 1
established under § 19 -3-706 to administer a public elementary and secondary 2
school, state-supported institution of higher education, and state -owned 3
property insurance program. 4
5
SECTION 16. Arkansas Code Title 23, Chapter 63, Subchapter 16, is 6
amended to add an additional section to read as follows: 7
23-63-1625. Authority for expenditure of public funds. 8
The state or a political subdivision of the state may expend public 9
funds for the purchase of capital stock in a captive insurance company 10
established under § 19-3-706. 11
12
SECTION 17. Arkansas Code § 23 -65-315 is amended to read as follows: 13
23-65-315. Tax on surplus lines brokers. 14
(a) No Except as otherwise provided in this section, no later than 15
sixty (60) days following the end of the calendar quarter in which surplus 16
lines insurance was procured, the surplus lines broker shall remit to the 17
Treasurer of State through the Insurance Commissioner a tax of four percent 18
(4%) on the direct premiums written, less return premiums and exclusive of 19
sums collected to cover state or federal taxes, on surplus lines insurance 20
subject to tax transacted by the surplus lines broker during the preceding 21
calendar quarter for the privilege of transacting business as a surplus lines 22
broker in this state. 23
(b) The commissioner may participate in a multistate agreement or 24
enter into a compact for the purpose of reporting, collecting, and 25
apportioning surplus lines insurance premium taxes. 26
(c) If a surplus lines insurance policy covers risks or exposures only 27
partially in this state and the commissioner has entered into an agreement 28
with other states for the apportionment of premium taxes for multistate 29
risks, the tax payable by the surplus lines broker shall be computed and paid 30
on the proportion of the premium that is properly allocable to the risks or 31
exposures located in this state according to the terms of the agreement. 32
(d) This section does not apply to a captive insurance company 33
established under § 19 -3-706 to administer a public elementary and secondary 34
school, state-supported institutions of higher education, and state -owned 35
property insurance program. 36 HB1821
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1
SECTION 18. Arkansas Code § 25 -35-102 is amended to read as follows: 2
25-35-102. Definitions. 3
For the purposes of this chapter: 4
(1) “Annual aggregate deductible” means the maximum amount 5
payable annually from the Arkansas Multi -Agency Insurance Trust Fund for 6
covered losses; 7
(2) “Insurance Commissioner” means the Insurance Commissioner of 8
the State Insurance Department or the commissioner's successor; 9
(3) "Risk manager" means the Administrator of the Risk 10
Management Division of the State Insurance Department; 11
(4)(3) "State agency" means any state agency, board, bureau, 12
commission, council, department, institution, or other similar entity; and 13
(5)(4) "Trust fund" means the Arkansas Multi -Agency Insurance 14
Trust Fund. 15
16
SECTION 19. Arkansas Code § 25 -35-103(b), concerning the purposes of 17
the Arkansas Multi-Agency Insurance Trust Fund, is amended to read as 18
follows: 19
(b) No money shall be appropriated from the Arkansas Multi -Agency 20
Insurance Trust Fund for any purpose except to pay: 21
(1) Insurance and reinsurance premiums for a motor vehicle; 22
(2) Loss adjustment expenses; 23
(3) Related educational and training expenses; 24
(4) Insured claims falling below the annual aggregate deductible 25
level; 26
(5) Expenses including actuarial, consultant, and service 27
contract fees; and 28
(6) Cybersecurity risk insurance premiums and expenses. 29
30
SECTION 20. Arkansas Code § 25 -35-104(a), concerning the agencies that 31
are allowed to participate in the Arkansas Multi -Agency Insurance Trust Fund, 32
is amended to read as follows: 33
(a) The following agencies shall participate in the Arkansas Multi -34
Agency Insurance Trust Fund: 35
(1) State agencies participating in the State Master Property 36 HB1821
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Policy as of June 30, 2003; 1
(2) The Division of Correction; 2
(3)(2) The Division of Community Correction; and 3
(4)(3) State agencies participating in the Arkansas State Master 4
Vehicle Policy as of June 30, 2003 ; and 5
(4) State agencies participating in the Arkansas Multi -Agency 6
Insurance Trust Cyber Liability Insurance Program as of June 30, 2025 . 7
8
SECTION 21. Arkansas Code § 25 -35-105(b), concerning the duties of the 9
risk manager of the State Insurance Department, is amended to read as 10
follows: 11
(b) At the discretion of the commissioner, the risk manager may: 12
(1) Enter into contracts; 13
(2) Purchase insurance and reinsurance in accordance with the 14
Arkansas Procurement Law, § 19 -11-201 et seq.; 15
(3) Adjust, settle, and pay or deny claims with notice to a 16
claimant; 17
(4) Pay expenses and costs; 18
(5) Study the risks of all participating state agencies and 19
properties their the state agencies' motor vehicle or cybersecurity risk 20
insurance coverages; 21
(6) Promulgate the form for insurance and reinsurance policies 22
and other forms; 23
(7) Issue certificates of coverage to state agencies for any 24
risks covered by the trust fund; 25
(8) Make recommendations about risk management and risk 26
reduction strategies to participating state agencies; 27
(9) Review participating state agency building construction, 28
major remodeling plans, program plans, and make recommendations to the 29
participating state agency about needed changes to address risk 30
considerations; 31
(10) Utilize underwriting discretion and authority to deny 32
coverage of any risk deemed to adversely affect the financial stability of 33
the trust fund; 34
(11) Establish values for participating state agency buildings 35
and structures to be insured; 36 HB1821
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(12)(10) Attend state agency planning and management meetings; 1
(13)(11) Review any proposed legislation and communicate with 2
members of the General Assembly and legislative committees about the 3
liability or risk management issues connected with any legislation; and 4
(14)(12) Solicit any needed information about state agency 5
plans, state agency programs, or state agency risks necessary to perform the 6
responsibilities under this chapter. 7
8
SECTION 22. Arkansas Code § 25 -35-107 is amended to read as follows: 9
25-35-107. Payment of losses. 10
The risk manager shall establish: 11
(1) Appropriate policies and procedures governing the payment of 12
losses from the Arkansas Multi -Agency Insurance Trust Fund, including notice 13
or proof of loss by any participating state agency; and 14
(2) Policies and procedures governing disputes that may arise 15
between the risk manager and any person having charge over the property motor 16
vehicle or cybersecurity risk insurance in question concerning the extent of 17
loss or damage. 18
19
SECTION 23. Arkansas Code § 25 -35-108 is repealed. 20
25-35-108. Limits on use of risk management data as evidence. 21
Notwithstanding any other provision of law, any report, recommendation, 22
survey, schedule, list, or data compiled, or action taken or not taken by or 23
at the request of the risk manager to identify, evaluate, or plan the safety 24
enhancement or risk reduction of any potential accident sites or other 25
hazards related to any entity covered by the Arkansas Multi -Agency Insurance 26
Trust Fund may not be admitted into evidence in any court or used for any 27
other purposes in any action for damages arising from any occurrence at a 28
location mentioned or addressed in the reports, recommendation, survey, 29
schedule, list, or data. 30
31
SECTION 24. Arkansas Code Title 25, is amended to add an additional 32
chapter to read as follows: 33
34
CHAPTER 44 35
STATE CAPTIVE INSURANCE PROGRAM ACT 36 HB1821
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1
25-44-101. Title. 2
This chapter shall be known and may be cited as the “State Captive 3
Insurance Program Act”. 4
5
25-44-102. Definitions. 6
As used in this chapter: 7
(1) "Cost-containment measure" means a process or practice of 8
controlling and managing expenses of the State Captive Insurance Program 9
established under § 19 -5-706 by reducing or limiting the amount of spending 10
required to administer the p rogram and remain within specific and preplanned 11
budgetary constraints; 12
(2) "Insured entity" means a public school or state agency 13
insured under this chapter; 14
(3)(A) "Public insurance adjuster" means: 15
(i) An individual who, for direct, indirect, or any 16
other compensation: 17
(a) Acts on behalf of an insured in 18
negotiating for or effecting the settlement of a claim or claims for loss or 19
damage under a policy of insurance coverage real or personal property; or 20
(b) On behalf of any other public insurance 21
adjuster, investigates, settles, or adjusts, advises, or assists an insured 22
with a claim or claims for loss or damage under any policy of insurance 23
covering real or personal property; or 24
(ii) An individual who advertises, solicits 25
business, or holds himself or herself out to the public as an adjuster of 26
claims for loss or damage under any policy of insurance covering real or 27
personal property. 28
(B) "Public insurance adjuster" does not mean an 29
individual employed by the State Captive Insurance Program or employed for 30
the benefit of the program; 31
(4) "Public school" means a public elementary school, a public 32
secondary school, an education service cooperative, an open -enrollment public 33
charter school, or a state -supported institution of higher education; and 34
(5) "State agency" means any state agency, board, bureau, 35
commission, council, department, division, institution, or other similar 36 HB1821
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entity. 1
2
25-44-103. State Captive Insurance Program — Creation — Mandatory 3
participation. 4
(a) There is established the State Captive Insurance Program. 5
(b) The program shall be a system of insurance provided by a captive 6
insurance company established under § 19 -3-706 for public schools and state -7
owned properties. 8
(c) If a public school or state agency with state -owned property 9
accepts a state appropriation for a facility, then the public school or state 10
agency with state-owned property shall participate in the program. 11
12
25-44-104. Department of Transformation and Shared Services — Powers 13
and duties regarding insurance for insured entities. 14
(a) Upon the State Board of Finance's approval of the formation of the 15
captive insurance company described under § 19 -3-706, the Secretary of the 16
Department of Transformation and Shared Services shall: 17
(1) Provide administrative support and employ staff to 18
implement, administer, and operate the captive insurance company; 19
(2) Facilitate the creation, implementation, or modification of 20
the insurance policy issued by the captive insurance company; 21
(3) Facilitate agreements between the captive insurance company 22
and other insurers and reinsurers; 23
(4)(A) Facilitate contracts, agreements, and procurements on 24
behalf of the captive insurance company to effectuate this chapter, including 25
without limitation contracting with financial consultants, investment 26
consultants, actuaries, auditors, accountants, brokers, adjusters, attorneys, 27
third-party administrators, and other contractors as necessary to carry out 28
the duties and responsibilities of establishing, implementing, and 29
administering the captive insurance company. 30
(B) Payment for expenses for these services may come from 31
the State Captive Insurance Program Trust Fund under § 19 -5-1161 or the 32
assets of the captive insurance company; 33
(5) Prepare or assist in the preparation of financial statements 34
and reports of financial condition; 35
(6) Maintain or assist in maintaining accounting for the captive 36 HB1821
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insurance company; 1
(7) Ensure the captive insurance company's compliance with 2
applicable laws and rules; 3
(8) Perform other duties or actions necessary for the effective 4
implementation, operation, and administration of the captive insurance 5
company; 6
(9) Recommend a minimum reserve balance for the State Captive 7
Insurance Program Trust Fund; 8
(10) Enforce the prohibition of the employment of a public 9
adjuster by a public school that is utilizing the State Captive Insurance 10
Program; 11
(11) Coordinate with the Commission for Arkansas Public School 12
Academic Facilities and Transportation to ensure timely and proper 13
inspections of public schools participating in the program; 14
(12) Require every public school or state agency with state -15
owned property to furnish to the secretary a complete list showing the 16
location of every building located on a public school or state agency's real 17
property; and 18
(13) Employ necessary adjusters, engineers, appraisers, and 19
other personnel required in the administration of this subchapter. 20
(b) Funds received by the captive insurance company shall be: 21
(1) Used exclusively for the purposes and activities stated in 22
this chapter; and 23
(2) Invested and reinvested in the name of the captive insurance 24
company according to the business plan that is submitted by the captive 25
insurance and approved by the State Insurance Department to ensure the 26
investments provide the greatest benefit for the captive insurance company. 27
(c) Notwithstanding any law to the contrary: 28
(1) A reserve balance remaining unexpended at the end of a 29
fiscal year in the captive insurance company's fund or account does not 30
revert to the General Revenue Fund Account, but is carried forward into the 31
subsequent fiscal year; and 32
(2) Interest accruing on investments and deposits of the captive 33
insurance company shall: 34
(A) Be credited to the captive insurance company's fund or 35
account; 36 HB1821
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(B) Not revert to the General Revenue Fund Account; and 1
(C) Be carried forward into the subsequent fiscal year. 2
(d)(1) The captive insurance company shall maintain a policy that is 3
consistent with the state's claims administration process under the Arkansas 4
Insurance Code and other applicable laws and rules related to the adjustment, 5
adjudication, and settlement of claims filed against the state. 6
(2) The granting or denial of claims filed pursuant to the 7
captive insurance company's policy shall be done according to the Arkansas 8
Insurance Code and other applicable laws and rules. 9
(e) The captive insurance company established under § 19 -3-706 is 10
subject to: 11
(1) Applicable laws and rules that apply to captive insurers 12
under § 23-63-1601 et seq. and the applicable laws and rules governing the 13
captive insurance company's business structure unless specifically exempted; 14
and 15
(2) An annual audit by Arkansas Legislative Audit . 16
(f) The captive insurance company shall file annually a copy of the 17
examination performed by the State Insurance Department with the Legislative 18
Council or, if the General Assembly is in session, the Joint Budget 19
Committee. 20
(g) If the captive insurance company established under § 19 -3-706 21
ceases to exist, then its assets remaining after its obligations and 22
liabilities have been satisfied or discharged shall pass to and become the 23
property of the Restricted Reserve Fund under § 19 -5-1263. 24
25
25-44-105. Creation — Office of Property Risk. 26
(a) There is created within the Department of Transformation and 27
Shared Services the Office of Property Risk that shall administer the State 28
Captive Insurance Program. 29
(b) The program shall be administered by the Secretary of the 30
Department of Shared Services that shall employ a director and administrative 31
staff in such numbers as are necessary to carry out this subchapter. 32
33
25-44-106. Reserve balance — Funding mechanism established to maintain 34
reserve balance — Definition. 35
(a) As used in this section, “reserve balance” means the amount in a 36 HB1821
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fund that includes the existing balance, minus the claims that have been 1
incurred but not reported, case reserves, and unearned premium reserves for 2
each year for the State Captive Insurance Program . 3
(b)(1) Beginning on December 1, 2026, and annually thereafter, the 4
Secretary of the Department of Transformation and Shared Services shall take 5
any actions necessary to achieve and maintain an optimal reserve balance to 6
ensure the solvency of the program as actuarially determined and commensurate 7
with the insured exposure. 8
(2) As of December 1, 2025, an optimal reserve balance amount is 9
no less than fifty million dollars ($50,000,000) or no more than seventy -five 10
million dollars ($75,000,000). 11
(3) The secretary shall annually establish an optimal reserve 12
balance to ensure solvency of the program as actuarially determined and 13
commensurate with the insured exposure of the program with the approval of 14
the State Board of Finance and the Legislative Council or, if the General 15
Assembly is in session, the Joint Budget Committee. 16
(c) Annually by December 1, the secretary shall: 17
(1) Calculate the projected reserve balance for: 18
(A) The remaining calendar year; and 19
(B) The next three (3) calendar years; 20
(2) Determine whether the amount of revenue collected by the 21
secretary is projected to satisfy the optimal reserve balance for the program 22
established under subdivision (b)(1) of this section for the remaining 23
calendar year; 24
(3) Notify the board and the Legislative Council or, if the 25
General Assembly is in session, the Joint Budget Committee, of the projected 26
reserve balance for the remaining calendar year as described in subdivision 27
(c)(1)(A) of this section; and 28
(4) Submit for prior approval by the board and the Legislative 29
Council or, if the General Assembly is in session, the Joint Budget 30
Committee, his or her plan to achieve or maintain the optimal reserve 31
balance. 32
(d) If the secretary's determination under subdivision (c)(2) of this 33
section does not equal or exceed the acceptable reserve balance amount as 34
described in subdivision (b)(3) of this section, the secretary shall notify 35
the Legislative Council or, if the General Assembly is in session, the Joint 36 HB1821
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Budget Committee, of the need to convene to consider providing additional 1
funding. 2
(e)(1) If during the Legislative Council's or, if the General Assembly 3
is in session, the Joint Budget Committee's, review of the secretary's 4
determination as required under subdivision (c)(4) of this section it is 5
determined that additional funding is needed to maintain the acceptable 6
reserve balance amount as described in subdivision (b)(3) of this section, 7
the Legislative Council or, if the General Assembly is in session, the Joint 8
Budget Committee, may: 9
(A) Recommend that the Governor call an extraordinary 10
session of the General Assembly; or 11
(B) Take further action as may be appropriate. 12
(2) If the General Assembly fails to provide funding by March 1 13
following the Legislative Council's or, if the General Assembly is in 14
session, the Joint Budget Committee's review, the secretary shall initiate a 15
process to collect the required additional revenue from program participants 16
through premium rate increases or reducing program benefits, or both, for the 17
next plan year. 18
(f)(1) If the secretary determines that the reserve balance for the 19
program will exceed seventy -five million dollars ($75,000,000), the secretary 20
may elect to use the excess reserve balance by lowering the premium rates for 21
the next plan year with prior approval from the Legislative Council or, if 22
the General Assembly is in session, the Joint Budget Committee. 23
(2) If the secretary does not elect to use the excess reserve 24
balance in the manner prescribed under subdivision (f)(1) of this section, 25
the secretary shall report to the Legislative Council or, if the General 26
Assembly is in session, the Joint Budget Committee, the reason for the 27
secretary's decision not to use the excess reserve balance. 28
29
25-44-107. Accountability — Legislative oversight — Transparency — 30
Annual reports — Definition. 31
(a) The Secretary of the Department of Transformation and Shared 32
Services and the State Board of Finance shall report annually to the 33
Legislative Council, or if the General Assembly is in session, the Joint 34
Budget Committee, on the status of the State Captive Insurance Program . 35
(b) The annual report required under subsection (a) of this section 36 HB1821
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shall: 1
(1) Be known as the " State Captive Insurance Program Annual 2
Report"; 3
(2) Be submitted to the Legislative Council or, if the General 4
Assembly is in session, the Joint Budget Committee, no later than thirty (30) 5
calendar days after the end of each plan year; and 6
(3) Include without limitation the following information 7
regarding the program: 8
(A) A detailed statement of investments and earnings; 9
(B) A new or significantly modified cost -containment 10
measure; 11
(C) Any change in plan options offered under the program; 12
(D) Potential funding changes to the program; 13
(E) Any premium increases or decreases over the previous 14
plan year; 15
(F) Any concern involving the reserve balance for the 16
program; 17
(G) Changes to the current calendar year projections and 18
the three-year projections for the program; 19
(H) Changes that would limit, eliminate, or increase 20
benefits of plan options offered under the program and the impact these 21
changes would have on the fiscal viability of the program, including the 22
reserve balance for the program; 23
(I) Changes that would limit, eliminate, or increase 24
eligibility requirements for the program; 25
(J) Vendor or broker issues or changes in vendors or 26
brokers from the previous year; 27
(K) Proposed contracts or changes in contracts from the 28
previous year; 29
(L) Any change in consultants from the previous year; 30
(M) Rules promulgated by the Department of Transformation 31
and Shared Services or the secretary regarding the implementation, 32
administration, or enforcement of the program; and 33
(N) Such other matters related to the program as the 34
Legislative Council considers necessary to perform its oversight of all 35
matters related to the program. 36 HB1821
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1
25-44-108. Finding of uninsurability — Effect. 2
(a)(1) The Secretary of the Department of Transformation and Shared 3
Services may maintain an inspection and engineering service designed to 4
reduce the hazards in buildings insured under the State Captive Insurance 5
Program. 6
(2) Upon review of the Legislative Council or, if the General 7
Assembly is in session, the Joint Budget Committee , the secretary may: 8
(A) Cancel or choose to not renew insurance on any insured 9
entity's property if the property is deemed no longer insurable; and 10
(B) Refuse to insure property when it determines that the 11
property does not meet program guidelines. 12
(b) In carrying out his or her duties under this section, the 13
secretary may request, and the insured entity shall provide, any information 14
requested for a determination concerning the reasons for the denial, 15
nonrenewal, or cancellation of insurance coverage. 16
17
25-44-109. Premium rate and payment. 18
(a) The premium rate established under this chapter shall be 19
actuarially determined and commensurate with the insured exposure. 20
(b) An insured entity shall make payment of the insured entity's 21
premium when demand is made as scheduled in the contract. 22
(c)(1) An insured entity that does not pay the premium when due shall 23
be charged a rate of interest at five percent (5%) per annum on all payments 24
due and unpaid on the policy issued. 25
(2) If an insured entity does not pay the premium due within 26
thirty (30) days, the insurance coverage may be canceled upon thirty (30) 27
days' notice. 28
29
25-44-110. Public insurance adjuster — Prohibited. 30
The use of a public insurance adjuster or any type of public adjusting 31
is prohibited by an insured entity under the State Captive Insurance Program. 32
33
25-44-111. Expeditious claims filing. 34
A claim made under the State Captive Insurance Program is required to 35
be filed no later than one (1) year after the loss is incurred. 36 HB1821
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1
SECTION 25. DO NOT CODIFY. Severability. 2
The provisions of this act shall be severable, and if any phrase, 3
clause, sentence, or provision is deemed unenforceable, the remaining 4
provisions of the act shall be enforceable. 5
6
SECTION 26. DO NOT CODIFY. Transitional provision for outstanding 7
claims. 8
(a) The Secretary of the Department of Transformation and Shared 9
Services shall promulgate rules to address the filing dates for a property 10
claim that is incurred but not reported under the Public Elementary and 11
Secondary School Insurance Act, § 6 -20-1501 et seq. or the Arkansas Multi -12
Agency Insurance Trust Fund Act, § 25 -35-101 et seq., once the State Captive 13
Insurance Program is operational. 14
(b) At a date to be determined by the secretary by rule, a property 15
claim shall be adjusted and paid, under the: 16
(1) Public Elementary and Secondary School Insurance Act, § 6 -17
20-1501 et seq.; or 18
(2) Arkansas Multi-Agency Insurance Trust Fund Act, § 25 -35-101 19
et seq. 20
(c)(1) The Arkansas School Boards Association shall be responsible for 21
a property claim that is incurred before the State Captive Insurance Program 22
is operational but has not been reported under the plan that is administered 23
by the Arkansas School Boards Association and the property claim shall be 24
adjusted and paid under the plan that is administered by the Arkansas School 25
Boards Association. 26
(2) The State Captive Insurance Program is not responsible for a 27
property claim that is incurred on the date determined by the secretary under 28
subsection (b) of this section that has not been reported under the plan that 29
is administered by the Arkansas School Boards Association. 30
(d) A property claim that is incurred on and after a date to be 31
determined by the secretary by rule shall be filed with the State Captive 32
Insurance Program. 33
34
SECTION 27. EMERGENCY CLAUSE. It is found and determined by the 35
General Assembly of the State of Arkansas that an instability in the property 36 HB1821
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insurance industry has led to increases in costs for public schools, state -1
supported institutions of higher education, and taxpayers for state -owned 2
property; that these increases are not sustainable under the current system; 3
that a new system for property insurance for public schools, state -supported 4
institutions of higher education, and state -owned property is needed to 5
alleviate the impact of high costs and provide a greater amount of certainty 6
concerning costs; and that this act is immediately necessary because it 7
establishes a new system for property insurance for public schools, stae -8
supported institutions of higher education, and state -owned property to allow 9
for better utilization of state resources and greater control to regulate 10
costs. Therefore, an emergency is declared to exist, and this act being 11
immediately necessary for the preservation of the public peace, health, and 12
safety shall become effective on: 13
(1) The date of its approval by the Governor; 14
(2) If the bill is neither approved nor vetoed by the Governor, 15
the expiration of the period of time during which the Governor may veto the 16
bill; or 17
(3) If the bill is vetoed by the Governor and the veto is 18
overridden, the date the last house overrides the veto. 19
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