SOURCE: Page 1, line 5; (06)AM022902.1. -->
Page 1, between lines 5 and 6, begin a new paragraph and insert:
"
Sec. 1. As used in this chapter, "commissioner" means the
insurance commissioner appointed under IC 27-1-1-2.".
Page 1, line 6, delete "1." and insert "
2.".
Page 1, line 7, delete "7" and insert "
10".
Page 1, line 9, delete "2." and insert "
3.".
Page 1, line 10, delete "7" and insert "
10".
Page 1, between lines 10 and 11, begin a new paragraph and insert:
"
Sec. 4. As used in this chapter, "examiner" has the meaning set
forth in IC 27-1-3.1-4.".
Page 1, line 11, delete "3." and insert "
5.".
Page 1, line 17, delete "4." and insert "
6.".
Page 2, line 8, delete "5." and insert "
7.".
Page 2, line 10, delete "7" and insert "
10".
Page 2, line 11, delete "6." and insert "
8.".
Page 2, between lines 17 and 18, begin a new paragraph and insert:
"
Sec. 9. As used in this chapter, "service provider" means an
individual or entity that enters into a contract with a consortium
program to provide to the consortium program:
(1) administrative;
(2) insurance brokerage;
(3) claims administration;
(4) risk control; or
(5) investment management;
services.".
Page 2, line 18, delete "7." and insert "
10.".
Page 2, line 18, delete "five (5)" and insert "
two (2)".
Page 2, line 35, delete "8." and insert "
11.".
Page 2, line 35, delete "body" and insert "
authority".
Page 2, delete lines 37 through 42, begin a new paragraph and insert:
"
Sec. 12. Except as provided in this chapter, the development,
administration, and operation of a consortium program does not
constitute the business of insurance, and a consortium program is
not subject to the insurance laws of Indiana.
Sec. 13. (a) A consortium program shall:
(1) establish a self-insurance fund with a per claim limit and
an aggregate limit on the total amount of self-insured risk
retained by the members in a fiscal year; and
(2) maintain excess insurance coverage that has been reviewed
and approved by the commissioner.
(b) A self-insurance fund established under subsection (a) must
be:
(1) actuarially sound; and
(2) funded at the beginning of each fiscal year by a
contribution from each member in an amount that reflects the
member's share of self-insured risk and other costs of the
consortium program.
(c) Annual contributions to the self-insurance fund under
subsection (b) must be:
(1) determined using generally accepted actuarial standards;
and
(2) set to fund, at the beginning of each fiscal year, at least one
hundred percent (100%) of the self-insured risk retained by
the members in a fiscal year plus the other costs of the
consortium program, including premiums for excess
insurance coverage.
Sec. 14. (a) The governing authority of the consortium program
shall adopt bylaws, including the following:
(1) A financial plan setting forth in general terms:
(A) the types of risks covered under the consortium
program;
(B) the per claim limit and the aggregate limit on the total
amount of self-insured risk retained by the consortium
program in a fiscal year;
(C) the minimum amount of excess insurance coverage that
must be maintained by the consortium program; and
(D) the procedure for determining each member's annual
contribution to the self-insurance fund.
(2) A plan of management that provides for:
(A) the responsibility of the governing authority with
regard to:
(i) maintaining the amount of reserves in the
self-insurance fund;
(ii) disposing of surpluses; and
(iii) administering the consortium program in the event
of termination;
(B) the basis on which new members may be admitted to
the consortium program;
(C) the basis on which participating members may
withdraw from the consortium program, including a:
(i) thirty (30) day period at the end of each fiscal year
after the consortium program's first year of operation
during which a member may withdraw; and
(ii) requirement that a withdrawing member remains
jointly and severally liable for any claim arising during
the period during which the withdrawing member was a
member; and
(D) other provisions necessary or desirable for the
operation of the consortium program.
(3) A conflict of interest policy for:
(A) employees; and
(B) service providers;
of the consortium program.
(b) The following must be submitted to and approved by the
commissioner before a consortium program may commence
operations:
(1) A copy of the bylaws described in subsection (a).
(2) The form of any insurance contracts purchased by the
consortium program, including contracts for excess insurance
coverage.
(3) An accounting, based on generally accepted actuarial
standards, of sufficient reserves committed to pay obligations
of the consortium program.
(4) A copy of each coverage document form to be issued by the
consortium program.
(5) Any other information determined necessary by the
commissioner.
(c) If the commissioner does not disapprove the information
submitted under subsection (b) earlier than thirty (30) days after
the information is submitted, the information is considered
approved.
Sec. 15. (a) A consortium program may enter into a contract
with a service provider to obtain the services of the service
provider.
(b) A contract entered into under subsection (a) must address
the following:
(1) The term of the contract.
(2) The scope of services and responsibilities of the service
provider.
(3) Compensation.
(4) Periodic reporting to the governing authority of the
consortium program.
(5) The ownership and confidentiality of information and data
utilized by the service provider in performing the service
provider's responsibilities under the contract.
(6) Compliance with the conflict of interest policy established
by the consortium program.
(7) Indemnification of the consortium program for negligence
of the service provider and proof of errors and omissions
insurance.
(8) Assignability of the contract.
(9) Competition between the service provider and the
consortium program during and after the term of the
contract.
(10) Cancellation of the contract.
Sec. 16. (a) A consortium program shall have an annual audit
performed by an independent certified public accounting firm
according to guidelines established by the department of insurance.
(b) Not later than one hundred eighty (180) calendar days after
the close of a consortium program's fiscal year, the consortium
program must furnish the consortium program's members with
audited financial statements certified by an independent certified
public accounting firm.
(c) Copies of the audit report and certified financial statements
required under this section must be provided to the commissioner
and the state board of accounts not later than one hundred eighty
(180) calendar days after the close of the consortium program's
fiscal year.
(d) A consortium program that fails to meet the deadline
specified in subsection (c) without having obtained an extension
from the commissioner is subject to a civil penalty of fifty dollars
($50) per day until the required information is received by the
commissioner.
(e) If a consortium program fails to have the annual audit
performed as required by subsection (a), the commissioner shall
cause the audit to be performed at the expense of the consortium
program.
(f) The working papers of the certified public accountant and
other records pertaining to the preparation of the audited financial
statements required under this section may be reviewed by the
commissioner. The cost of a review under this subsection must be
paid by the consortium program.
Sec. 17. Not later than sixty (60) calendar days after the
beginning of a consortium program's fiscal year, the governing
authority shall submit the following to the commissioner:
(1) A copy of the bylaws adopted by the consortium program.
(2) A copy of each coverage document form issued by the
consortium program.
(3) A copy of the insurance contracts purchased by the
consortium program, including contracts for excess insurance
coverage.
(4) A copy of each service provider contract entered into by
the consortium program.
(5) A certification by an independent actuary that the reserves
in the self-insurance fund are adequate to pay the obligations
of the consortium program.
Sec. 18. (a) If a consortium program fails to comply with the
requirements of this chapter, the commissioner shall issue a notice
of noncompliance to the consortium program.
(b) Not later than thirty (30) calendar days after a consortium
program receives a notice of noncompliance under subsection (a),
the consortium program shall file with the commissioner a written
request for time to restore compliance and a plan to restore
compliance.
(c) The commissioner, on receiving the written request and plan
to restore compliance filed under subsection (b), may grant a
period not longer than one (1) year during which the consortium
program may restore compliance.
(d) If:
(1) a plan to restore compliance is not filed under subsection
(b);
(2) a plan to restore compliance is filed under subsection (b)
and not approved by the commissioner; or
(3) a plan to restore compliance is filed under subsection (b)
and approved by the commissioner, and at the end of a period
granted under subsection (c) the consortium program is not
in compliance with this chapter;
the commissioner may act to liquidate or rehabilitate the
consortium program under IC 27-9 as if the consortium program
were an insurance company.
Sec. 19. (a) The commissioner or an examiner:
(1) may conduct an examination of a consortium program
under IC 27-1-3.1 as often as the commissioner, in the
commissioner's sole discretion, considers appropriate; and
(2) shall conduct an examination of a consortium program
under IC 27-1-3.1 at least once every five (5) years.
(b) Upon determining that an examination described in
subsection (a) is necessary, the commissioner shall issue an
examination warrant:
(1) appointing one (1) or more examiners to perform the
examination; and
(2) instructing the examiners appointed under subdivision (1)
concerning the scope of the examination.
(c) In conducting an examination under this section, an
examiner shall observe the requirements set forth in the NAIC
examiner's handbook (as defined in IC 27-1-3.1-6), to the extent
that the requirements are consistent with this chapter. The
commissioner may employ additional guidelines or procedures
necessary to determine a consortium program's compliance with
this chapter.
Sec. 20. (a) A consortium program is subject to IC 27-4-1 as if
the consortium program were an insurance company.
(b) The rights of a claimant under a consortium program are in
no event less than the rights of a claimant under an insurance
contract issued by an insurance company authorized to do business
under IC 27.
Sec. 21. The commissioner shall, not later than February 1 of
each year, report to the legislative council in an electronic format
under IC 5-14-6. The report must include the following information
for the previous calendar year:
(1) A description of the scope of the market of coverage
under:
(A) insurance contracts; and
(B) consortium programs;
serving independent educational institutions.
(2) The number of complaints filed against a consortium
program under IC 27-4-1.
(3) The number of independent educational institutions
participating in consortium programs.
(4) The loss history of each consortium program.
Sec. 22. An insurance producer that conducts business with a
consortium program must be licensed as an insurance producer
under IC 27-1-15.6.
Sec. 23. (a) Motor vehicle coverage provided by a consortium
program must provide the ability for a member to respond in
damages for liability arising out of the ownership, maintenance, or
use of a motor vehicle in amounts at least equal to the amounts
required under IC 9-25-4.
(b) A member that participates in the motor vehicle coverage
provided by a consortium program is considered to meet the
financial responsibility requirements set forth in IC 9-25-4, and an
application for a certificate of self-insurance under IC 9-25-4-11 is
not required.
Sec. 24. Information regarding the:
(1) part of funds; or
(2) liability reserve;
established by a consortium program to satisfy a specific claim or
cause of action is confidential and is not subject to subpoena or
order to produce, except in a supplementary or ancillary
proceeding to enforce a judgment.
Sec. 25. The department of insurance may adopt rules under
IC 4-22-2 to implement this chapter.".
Delete page 3.
(Reference is to SB 229 as introduced.)
and when so amended that said bill do pass .
Committee Vote: Yeas 6, Nays 0.
____________________________________
Senator Paul, Chairperson
AM 022902/DI 110 2006