BILL NUMBER: AB 2327INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Harkey FEBRUARY 19, 2010 An act to add Division 4 (commencing with Section 13900) to the Insurance Code, relating to risk pools. LEGISLATIVE COUNSEL'S DIGEST AB 2327, as introduced, Harkey. Affordable housing: risk retention pool. Existing law authorizes local agencies to enter into a joint pooling agreement to form a single statewide insurance pooling arrangement for the payment of tort liability or public liability losses incurred by those agencies. This bill would authorize an affordable housing entity, as defined, to include affordable housing entities that are created under the laws of another jurisdiction or organized under the laws of another state to join with one or more affordable housing entities in an arrangement providing for the pooling of self-insured claims or losses, as specified. The pool would be authorized to include a separate legal or administrative entity whose duty it would be to administer the insurance pool, organized under the laws of this state or another state or operating in this state or another state. The bill would prohibit the pooling arrangement from being considered insurance or being subject to regulation under the Insurance Code. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Division 4 (commencing with Section 13900) is added to the Insurance Code, to read: DIVISION 4. Affordable Housing Entities Risk Retention Pool 13900. An affordable housing entity may join with one or more other affordable housing entities in an arrangement providing for the pooling of self-insured claims or losses with respect to any of the following: (a) Insurance covering all or any part of any tort liability. (b) Insurance covering any employee of the affordable housing entity against all or any part of his or her liability for injury resulting from an act or omission in the scope of employment. (c) Insurance covering any board member, officer, partner, manager, member, or volunteer of the affordable housing entity against any liability that may arise from any act or omission in the scope of participation with the affordable housing entity. (d) Insurance covering any loss arising from physical damage to motor vehicles, personal property, real property, or other property owned or operated by the affordable housing entity. 13901. The pooling arrangement established pursuant to this division shall not be considered insurance, and shall not be subject to regulation under this code. 13902. (a) Any insurance pool, established pursuant to this division, may include the organization of a separate legal or administrative entity whose duty it is to administer the insurance pool, which may be a nonprofit corporation, limited liability company, partnership, trust, or other form of entity, whether organized under the laws of this state or another state or operating in another state. (b) Any insurance pool established pursuant to this division shall have initial pooled resources of not less than two hundred fifty thousand dollars ($250,000). 13903. All participating affordable housing entities in any insurance pool, established pursuant to this division, are required to agree to pay premiums or make other mandatory financial contributions, as determined by the governing board, provided for by the insurance pool arrangement, that are necessary to ensure a financially sound risk pool. 13904. Any insurance pool, established pursuant to this division, shall not insure against any liability that may be insured against pursuant to Division 4 (commencing with Section 3200) of the Labor Code. 13905. Nothing in this division shall be construed to authorize an affordable housing entity to pay for, to insure, to contract for payment of, or to provide for payment for, any part of a claim or judgment against an employee of the affordable housing entity for punitive or exemplary damages. 13906. For the purpose of this division, "affordable housing" means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to individuals of low income, as defined in Section 50093 of the Health and Safety Code. 13907. For the purpose of this division, an "affordable housing entity" means any of the following: (a) A housing authority created under the laws of this state or another jurisdiction and any agency or instrumentality of a housing authority, including, but not limited to, a legal entity created to conduct a self-insurance program for housing authorities that complies with Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the Government Code. (b) A nonprofit corporation organized under the laws of this state or another state that is engaged in providing affordable housing. (c) A partnership, general or limited, or limited liability company that is engaged in providing affordable housing and that is affiliated with a housing authority described in subdivision (a) or a nonprofit corporation described in subdivision (b) if the housing authority or nonprofit corporation has one or more of the following: (1) A financial or ownership interest in the partnership or limited liability company or the right to acquire that interest. (2) The power to direct the management or policies of the partnership or limited liability company. (3) A contract to lease, manage, or operate the affordable housing owned by the partnership or limited liability company. (4) Any other material relationship with the partnership or limited liability company.