GREEN SHEET REDIGEST
HB 1078 2022 Regular Session Seabaugh
INSURANCE/SELF: Authorizes the creation of Louisiana timber and agriculture
transportation group self-insurance funds.
DIGEST
Proposed law authorizes the creation of a self-insurance fund for the purpose of providing
auto coverage for vehicles that transport timber and agriculture products and names the fund
as the La. Agriculture Transportation Group Self-Insured Fund.
Proposed law provides that any five or more La. timber or agriculture companies, who are
not public entities, each of whom has a positive net worth and is financially solvent, may
pool their liabilities and self-insure for the purposes of maintaining automobile coverage for
timber and agriculture transportation vehicles. Proposed law provides that members of the
fund must also be members of one or more bona fide trade or professional associations.
Proposed law defines "bona fide trade or professional association" as an active trade or
professional association that promotes La. timber or agriculture production, is charted and
domiciled in Louisiana, has been in existence and conducted regular meetings for at least five
years, and is not established for the primary purpose of operating a self-insured fund.
Proposed law provides that no fund can become operative until the fund is issued a certificate
of authority by the Dept. of Insurance after the department has approved the application for
the fund and the documents required to establish solvency and the ability to properly manage
and pay claims.
Proposed law provides that no person may solicit membership for a fund unless they are
licensed by the department as a licensed insurance producer. Proposed law sets forth
requirements for insurance producers who solicit membership for the fund and for the
payment of commissions.
Proposed law provides that the rates for coverage, or the costs of premiums, that may be
charged to the members must be in an amount that is actuarially justified. Proposed law
further provides that once the rate filing is made to the department, the premium rates may
be charged to the members of the fund for automobile coverage within 90 days after the rate
filing is made.
Proposed law provides that, in order to maintain financial stability of the fund, the Dept. of
Insurance is to require two or more timber or agriculture companies to maintain a combined
net worth of $1,000,000 or five or more principals of the member companies to maintain a
combined net worth of $1,000,000. Proposed law further provides that financial statements
must not be more than one year old when submitted to the department of insurance for
approval of the self-insurance fund. Proposed law requires further security in the form of
excess insurance or reinsurance in an amount and in form that is approved by the Dept. of
Insurance to insure the ability to properly manage and pay claims.
Proposed law provides that to further the financial stability of the self-insured fund, the
members will pay a percentage over and above their premiums to establish a reserve account.
Proposed law further provides that the reserve account will be maintained at all times while
the self-insured fund is in operation and no payments can be made from the reserve account
unless approved by the department.
Proposed law provides that, if the fund employs one or more third-party administrators, each
third-party administrator of the fund must post a bond. Proposed law provides that, if the
fund employs its own administrator, the fund is required to purchase a bond, errors and
omission's insurance, or other security that is approved by the Dept. of Insurance.
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Prepared by Curry J. Lann. Proposed law provides that a self-insurer's fund must obtain a minimum of $750,000 in
premiums in the fund for the first year and $2,000,000 in premiums for each year thereafter.
Proposed law provides for agreements to pool liabilities to be set forth in the indemnity
agreement or other instruments. Proposed law provides for annual premium audits to be
conducted by an independent audit firm that is approved by the department.
Proposed law provides for proper audits by the fund in a form that is acceptable to the
department. Proposed law does not prohibit the legislative auditor from also reviewing the
records and conducting an audit of the fund.
Proposed law provides that each member must sign mutual indemnity agreements to cover
the risk of liability covered by the fund and copies of the agreements will be presented to the
Dept. of Insurance when the application is made for approval of the fund. Proposed law
provides that proof of advanced payments to the fund of at least 25% of each member's first
year estimated annual earned premiums must be provided with the application.
Proposed law provides that monies deposited into the fund may be invested in certain
interest-bearing or interest-accruing investments and in certain bonds and securities that are
publically traded or have a certain minimum rating with Moody's, Standard and Poor's, or
Fitch.
Proposed law further provides that the department may impose fines and penalties for failure
to comply with requirements to operate the fund as required by proposed law. Proposed law
further provides that the department may revoke the authority to operate the fund or issue
cease and desist orders if the requirements of proposed law are not maintained by the fund
and its members.
Proposed law provides for standards to which self-insurers must adhere and provides for
authority for the department to take action when a self-insurer is in hazardous financial
condition.
Proposed law provides that any administrative hearing that is necessary to resolve a dispute
related to the regulation of the fund is to be conducted by the division of administrative law
in accordance with present law.
Proposed law provides that, if the fund becomes insolvent, the Dept. of Insurance will require
the fund to submit a plan to take necessary action to restore solvency and the plan must be
approved by the department. Proposed law provides that, if the fund cannot be restored, the
Dept. of Insurance is authorized by proposed law to execute delinquency proceedings and
place the fund into confidential administrative supervision, conservation, rehabilitation, or
liquidation. Proposed law further provides that the 19th Judicial District Court has exclusive
jurisdiction to hear any delinquency proceeding instituted by the department for the failure
of a fund to comply with the approved corrective action plan and the court may issue an
injunction to restrain the fund and its officers, agents, directors, or employees from
transacting any insurance business or disposing of property until further action by the court.
Proposed law provides that an examination of the fund is to be made by the department at
least every five years. Proposed law provides that the examiners are to be appointed by the
department, who is to instruct them on the scope of the examination in order to determine
if the fund is operating in compliance with proposed law, and the examiners expenses are to
be paid by the fund.
Proposed law provides that the department may employ investigators to investigate
complaints received against a fund that is approved to operate under proposed law or against
any unauthorized group self-insurance fund that is reported to be operating in this state.
Proposed law provides that a fund wishing to dissolve may apply to the department.
Proposed law further provides the requirements for the dissolution of the fund, including the
requirements for payment of future claims and the methods to secure future obligations of
the fund.
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Prepared by Curry J. Lann. Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 3:4351.1-4351.16)
Summary of Amendments Adopted by House
The House Floor Amendments to the engrossed bill:
1. Clarify the name of the fund is the La. Agriculture Transportation Group Self-
Insured Fund.
2. Expand the definition of "timber or agriculture transportation vehicle" to include
a vehicle used by an operator or principal.
3. Make technical changes.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Agriculture, Forestry,
Aquaculture, and Rural Development to the reengrossed bill
1. Provides for an effective date upon signature of the governor.
2. Makes technical corrections.
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Prepared by Curry J. Lann.