Existing law authorizes a group of five or more public or private employers, under certain circumstances, to act as an association of self-insured employers for the purpose of providing industrial insurance. (NRS 616B.350-616B.446) Existing law requires members of such an association: (1) of public employers, to be engaged in the same or similar classifications of employment; and (2) of private employers, to be members or associate members of a bona fide trade association, as determined by the Commissioner, which is incorporated in this State and has been in existence for at least 5 years. (NRS 616B.350) Section 1 of this bill additionally requires all members of an association of self-insured public or private employers to perform related activities in a given industry. Existing law requires an association of self-insured public or private employers to be operated by a board of trustees whom the members of the association elect for terms set forth in the bylaws of the association. The board of trustees must be composed of: (1) for public employers, members who are officers or employees of employers who are members of the association; and (2) for private employers, at least two-thirds of members who are employees, officers or directors of the members of the association. (NRS 616B.365) Section 3 of this bill requires that the board of trustees of an association of self-insured: (1) public employers be officers or managerial employees of the public employers who are members of the association; and (2) private employers be managerial employees, officers or directors of the members of the association. Section 1 requires the bylaws of an association to: (1) establish a procedure for nominating persons who may be elected to the board of trustees which is free from certain outside influence; and (2) contain a statement of fiduciary responsibility for administering the plan of insurance. Existing law requires an association of self-insured public or private employers and each member of the association to execute an indemnity agreement which jointly and severally binds the association and each member to secure the payment of all compensation due for industrial insurance claims. (NRS 616B.350, 616B.353, 616B.386) Existing law authorizes the Commissioner of Insurance to assess all associations of self-insured public or private employers to provide for claims against any insolvent association. (NRS 616B.443) Section 2 of this bill requires such an indemnity agreement to: (1) authorize the association to assess certain fees from members if any member defaults; and (2) notify members that the Commissioner may assess the association to provide for claims against another association pursuant to existing law. Existing law requires an association of self-insured public or private employers to: (1) collect an annual assessment from each member of the association; and (2) maintain a policy of excess insurance in a form and amount required by the Commissioner. (NRS 616B.353) Section 2 requires that: (1) money collected from annual assessments be used only for the administration of the plan and to pay claims; and (2) the required policy of excess insurance have a self-insured retention of not less than $250,000. Section 2 also revises the minimum amount of a bond which an association's administrator is required to deposit with the Commissioner. Section 4 of this bill requires the Commissioner, as part of an annual audit of each association required by existing law, to verify the annual assessment required to be paid by each member to ensure that the assessment is reasonable. Existing law authorizes an association of self-insured public or private employers, under certain circumstances, to declare and distribute dividends to the members of the association. (NRS 616B.413) Section 5 of this bill: (1) prohibits an association from declaring or distributing dividends to its members; and (2) authorizes an association that has excess assets to reduce the annual assessment required to be paid by each member of the association. Existing law requires each association of self-insured public or private employers to maintain certain reserves. (NRS 616B.419) Section 6 of this bill requires an association to furnish information to the Commissioner upon request for the review of such reserves. Existing law authorizes the Commissioner to: (1) issue orders requiring that an association of self-insured public or private employers or a member of the association cease and desist from engaging in certain prohibited acts; and (2) enforce such orders by imposing administrative fines or withdrawing the certificate of the association if the association or a member violates such an order. (NRS 616B.425) Section 7 of this bill additionally authorizes the Commissioner to issue and enforce such cease and desist orders against the board of trustees of an association, the association's administrator or a third-party administrator employed by the association. Existing law also authorizes the Commissioner to impose administrative fines or institute proceedings to withdraw the certificate of an association for certain violations of existing law and regulations. Existing law authorizes an association that is aggrieved by a decision of the Commissioner to seek judicial review. (NRS 616B.428, 616B.431, 616B.437, 616D.120) Sections 8-10 and 12 of this bill make those provisions equally applicable to an association's administrator. Section 11 of this bill requires the Commissioner to adopt regulations which establish uniform policies for and the required contents of an underwriting plan for each association of self-insured public or private employers. Section 13 of this bill provides that any certificate issued by the Commissioner authorizing a group of employers to act as an association of self-insured public or private employers that is in effect on October 1, 2025, expires on October 1, 2026. Section 13 requires an association of self-insured public or private employers that wishes to continue to act as such an association after October 1, 2026, to apply for and be issued a new certificate.

Statutes affected:
As Introduced: 616B.350, 616B.353, 616B.365, 616B.410, 616B.413, 616B.419, 616B.425, 616B.428, 616B.431, 616B.437, 616B.446, 616D.120
BDR: 616B.350, 616B.353, 616B.365, 616B.410, 616B.413, 616B.419, 616B.425, 616B.428, 616B.431, 616B.437, 616B.446, 616D.120