RÉSUMÉ DIGEST
ACT 259 (SB 147) 2023 Regular Session Robert Mills
New law 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.
New 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.
New 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.
New law provides that arrangements to pool liabilities are not deemed insurance and are not
subject to the La. Insurance Code. New law further provides that such arrangements are not
member insurers of the La. Insurance Guaranty Association (LIGA) and LIGA is not liable
for any claims against an arrangement.
New law provides for establishment of a trust fund to serve as the group self-insurance fund
governed by a board of trustees.
New 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 Department of Insurance (department) may waive the $1,000,000
requirement.
New 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.
New law provides for written application to the department to form a self-insurance fund.
New law 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.
(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 new 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
new 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.
New law establishes certain requirements for the fund; provides for excess insurance;
administrative and service companies; liability of the fund; and refunds. New law provides
that the fund is not to be considered a partnership under state law. New 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 new
law.
New 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.
New law provides for investments by the fund and that securities or other investments be
interest-bearing, interest-accruing, dividend-paying, or income-paying but prohibits
investment in rental assets.
New law delineates the authority of the department in the self-insurance fund. Provides that
new law does not prohibit the legislative auditor from reviewing records and conducting a
lawful audit.
New 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.
New 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. New 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 five percent of the premium of the
latest audited financial statement, whichever is greater.
New law provides for insolvencies involving the fund and for the department to conduct
examination of the fund at least once every five years and that the examination include the
affairs, transactions, accounts, records, documents, and assets of the authorized group self-
insurance fund. New law further 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.
New law provides for response to issues related in the examination by the fund.
New law provides for procedures in which the fund chooses to dissolve and for approval or
disapproval by the department. New law prohibits dissolution of the fund without
authorization. New law further 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.
New law grants exclusive jurisdiction over any proceeding instituted under new law to the
Nineteenth Judicial District Court.
New law creates exceptions for certain documents and records to the Public Records Law.
Effective on June 12, 2023.
(Amends R.S. 44:4.1(B)(11); Adds R.S. 22:472.1 – 472.20)