The bill amends Section 45-5-20.1 of the General Laws in Chapter 45-5, which pertains to the powers of city and town councils and regional school districts to establish an insurance corporation, obtain insurance, and enter into cooperative risk management programs. The amendment allows these entities to create separate corporations for the purpose of issuing insurance policies, reinsurance, and developing risk management programs. These corporations can pool risks, acquire excess loss insurance, and handle claims against their members. The bill specifies that contributions to these corporations must be actuarially sound and requires an annual audit, with discrete accounts for each risk management program.

The bill also includes several significant changes to the existing law. It removes the language that previously stated these corporations are not considered insurance companies and are not regulated by the Rhode Island Department of Business Regulation. Additionally, it outlines that the corporations will be treated as public corporations and instrumentalities of the state, but not as a state department. The governing board of these corporations will consist of municipal officials who will not receive compensation for their duties. The bill exempts the corporations from state taxes, except inheritance, estate, and gift taxes, and allows for long-term contracts with member entities without voter approval. Upon fulfilling their purpose and settling obligations, the corporations may dissolve, with assets distributed to members. The corporations are also exempt from recording, filing, and transfer taxes, as well as surplus line premium taxes on insurance policies. The act will take effect upon passage.

Statutes affected:
7088: 45-5-20.1