RDCSB147 3264 2873
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
SB 147 Reengrossed 2023 Regular Session Robert Mills
Proposed law authorizes the creation of a self-insurance fund to provide property coverage
for churches and nonprofit religious organizations. Creates the La. Churches and Nonprofit
Religious Organizations Self-Insured Fund to allow churches and religious organizations to
self-insure by allowing churches, religious organizations, and religious denominations to ban
together and self-insure to increase availability of property insurance for local churches and
religious buildings, increasing competition on insurance rates, and reducing the volume of
business written by the La. Citizens Property Insurance Corp.
Proposed law authorizes two or more churches or nonprofit religious organizations or one
or more religious denominations to pool their liabilities for the purposes of providing
property coverage for their buildings and properties, so long as they have a positive net
worth, are financially solvent, and capable of assuming the obligations.
Proposed law defines "church", "department", "fund", "hazardous financial condition",
"insolvency", "nonprofit religious organization", and "property coverage", which includes
coverage for damage or loss of a structure or building and may include any or all of the
following:
(1)Premises liability coverage.
(2)Contents coverage for furniture or equipment.
(3)Wind and hail coverage.
(4)Loss of use coverage.
(5)Medical payments coverage.
Proposed law provides that arrangements to pool liabilities are not deemed insurance and are
not subject to the La. Insurance Code. Further provides that such arrangements are not
member insurers of the La. Insurance Guaranty Assoc. and the Assoc. is not liable for any
claims against an arrangement.
Proposed law provides for establishment of a trust fund to serve as the group self-insurance
fund governed by a board of trustees.
Proposed law requires that two or more members of the fund maintain a minimum combined
net worth of $1,000,000 with a ratio of current assets to liabilities of at least one-to-one.
Provides that once the fund has been in operation for three years and has a total surplus of
$3,000,000, the Dept. of Insurance (department) may waive the $1,000,000 requirement.
Proposed law provides for audit of financial statements or the department may require
submission of necessary financial documents in a form and manner approved by the
department.
Proposed law provides for written application to the department to form a self-insurance
fund. Requires that applications contain the following items:
(1)The properly completed indemnity agreement in a form acceptable to the department.
(2)Security as required by law.
(3)Copies of acceptable excess insurance or reinsurance as required by law.
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(4)A bond covering each third-party administrator as provided by law. If the fund
employs its own administrator, the fund is required to purchase a bond, errors and
omissions insurance, directors' and officers' liability insurance, or other security
approved by the department for the administration of the fund.
(5)A certification from a designated depository attesting to the amount of monies on
hand.
(6)Copies of fund bylaws and any trust agreement or other governance documents.
(7)Individual application of each member of the fund applying for membership in the
fund and copies of each member's executed indemnity agreement.
(8)Evidence of financial strength and liquidity of the members dated as of the date of
the filing of the application.
(9)Proof that the fund is required to have the minimum annual earned normal premium
prescribed in proposed law.
(10)The current annual report or financial statement of any casualty insurance company
providing excess or reinsurance coverage for the fund meeting the requirements of
proposed law.
(11)The name, address, and telephone number of each attorney representing the fund,
each qualified actuary for the fund, and each certified public accountant who will be
auditing the annual financial statements of the fund, as well as evidence of
appointment of each by the fund.
(12)The domicile address in this state where the books and records of the fund will be
maintained, and the state from which the fund will be administered.
(13)Proof of advance payment to the fund by each initial member of the fund of not less
than 25% of that member's first year estimated annually earned normal premiums.
(14)A feasibility study or other analysis prepared by a qualified actuary utilizing actual
loss history of the initial members of the fund.
(15)Pro forma financial statements projecting the first three years of operations of the
fund based upon a feasibility study or other analysis prepared by a qualified actuary
including a pro forma balance sheet, income statement, and statement of cash flow,
each prepared in accordance with generally accepted accounting principles.
(16)A copy of the fund's premium billing policy indicating whether the premium
payments to the fund will be paid by members annually, monthly, quarterly, or any
combination thereof.
Proposed law sets forth certain requirements for the fund; provides for excess insurance;
administrative and service companies; liability of the fund; and refunds. Provides that the
fund is not to be considered a partnership under state law. Further requires fund members
to be solidarily liable for liabilities incurred by the fund after the inception of the fund year
in which the member becomes part of the fund, to the extent required in proposed law.
Proposed law provides that monies in excess of that necessary to pay all obligations of the
fund may be declared as refundable to the members of the fund by the board of trustees.
Proposed law provides for investments by the fund and that securities or other investments
be interest-bearing, interest-accruing, dividend-paying, or income-paying. Prohibits
investment in rental assets.
Proposed law delineates the authority of the department in the self-insurance fund. Provides
that nothing prohibits the legislative auditor from reviewing records and conducting a lawful
audit.
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Proposed law requires licensing of persons soliciting membership except that no employee
of the fund, religious denomination, or association of nonprofit religious organizations is
required to be licensed as an agent if the solicitation of membership for the fund is not the
primary duty of the employee.
Proposed law requires the fund to file rates on an actuarially justified basis with the
department and to use the rates 90 days after filing, unless disapproved by the department
within the 90-day period.
Proposed law provides for actions when the fund has three years of consecutive net losses
on the audited financial statements of the fund, or two years of consecutive net losses on the
audited financial statements of the fund in excess of $500,000 or 5% of the premium of the
latest audited financial statement, whichever is greater.
Proposed law provides for insolvencies involving the fund and for the department to conduct
examination of the fund at least once every five years. Provides that the examination include
the affairs, transactions, accounts, records, documents, and assets of the authorized group
self-insurance fund. Requires all expenses incurred by the department in conducting the
examination or investigation, including the expenses and fees of examiners, auditors,
accountants, actuaries, attorneys, or clerical or other assistants who are employed by the
department to be paid by the group self-insurance fund.
Proposed law provides for response to issues related in the examination by the fund.
Proposed law provides for procedures in which the fund chooses to dissolve and for approval
or disapproval by the department. Prohibits dissolution of the fund without authorization.
Provides that application to dissolve be granted if either of the following conditions is met:
(1)The fund has no outstanding liabilities including incurred but not reported liabilities.
(2)The fund is covered by an irrevocable commitment from a licensed insurer which
provides for payment of all outstanding liabilities and for providing all related
services, including payment of claims, preparation of reports, and administration of
transactions associated with the period during which the plan provided coverage.
Proposed law grants exclusive jurisdiction over any proceeding instituted under proposed
law to the Nineteenth Judicial District Court.
Proposed law creates exceptions to the Public Records law for proposed law (R.S. 22:472.8
and 472.14).
Effective upon signature of the governor or upon lapse of time for gubernatorial action.
(Amends R.S. 44:4.1(B)(11); Adds R.S. 22:472.1 – 472.20)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill
1. Adds comprehensive provisions regarding the obligations, operations, and
responsibilities of the self-insurance fund.
2. Adds provisions for financial audits of the fund.
3. Adds provisions as to requirements for application of the self-insurance fund.
4. Adds provisions for excess insurance; administrative and service companies;
and for fund members to be solidarily liable for liabilities of the fund.
5. Adds provisions for investments by the fund.
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6. Adds provisions as to fund audits by the Department of Insurance.
7. Adds provisions regarding records of the fund.
Senate Floor Amendments to engrossed bill
1. Makes technical changes.
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Insurance to the
reengrossed bill:
1. Add the proposed law of R.S. 22:472.8 and 472.14 to the public records
exceptions enumerated in present law (R.S. 44:4.1(B)(11)).
2. Make technical changes.
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