RÉSUMÉ DIGEST
ACT 686 (SB 275) 2022 Regular Session Abraham
New law provides that the following words and terms must have the meaning indicated
unless the context must clearly indicate a different meaning:
(1) "Affiliate" means an entity as defined in prior law.
(2) "Governing body" means the body which exercises the functions of the affiliate or
subsidiary of the local housing authority.
(3) "Risk management organization" means an association formed by two or more
affiliates and subsidiaries of local housing authorities by an agreement made pursuant
to the provisions of prior law, for the development and administration of a risk
management program and one or more group self-insurance funds.
(4) "Risk management program" means a plan and activities carried out under such plan
by a risk management organization to reduce risk of loss, including safety
engineering and other loss prevention and control techniques, and to administer one
or more local self-insurance funds, each established for one or more risks.
(5) "Local housing authority" mean any parish or municipal housing authority.
(6) "Self-insurance fund" means a pool of monies established by a risk management
organization from contributions of its members.
New law provides that any two or more subsidiaries and affiliates of local housing authority
may make and execute an agreement between or among themselves to form and become
members of a risk management organization. After a risk management organization has been
formed, any affiliate or subsidiary of a local housing authority may become a member and
through participation in the organization may:
(1) Pool its general liability risks.
(2) Pool its workers' compensation risks.
(3) Pool its directors and officers liability risks.
(4) Pool its property coverage risks.
(5) Pool other coverage risks the board of trustees or the risk management organization
may determine to be appropriate.
(6) Purchase insurance for risks of general liability, workers' compensation, directors and
officers liability.
New law provides that affiliates and subsidiaries of local housing authorities concluding an
agreement must, by resolution duly adopted by their governing body, designate the Louisiana
Housing Council, Inc. to administer the risk management agency and any group self-
insurance fund or funds established by the organization and to administer the terms and
conditions of the agreement by which the organization and any self-insurance fund or funds
have been established.
New law provides that all arrangements and agreements made under the authority of new law
must be reduced to writing. Further provides that any affiliate and subsidiary of a local
housing authority may become members of a risk management organization by the authority
of resolution adopted by the governing body.
New law provides that the insurance committee of the Louisiana Housing Council, Inc., must
constitute the board of trustees of such organization established as provided in prior law and
must be authorized to adopt bylaws.
New law provides that a risk management organization is not an insurance company or an
insurer under the laws of this state and the development and administration by such
organization of a group self-insurance refund or funds established for one or more risks must
not constitute doing insurance business.
New law provides that any declaration of coverages issued to its members by the
organization must have a notice providing that in the event of insolvency of the risk
management organization, the members of the organization are not covered by the Louisiana
Insurance Guaranty Association (LIGA) or the Louisiana Life and Health Insurance Guaranty
Association (LLHIGA), which guarantees only specific types of policies issued by insurance
companies authorized to do business in Louisiana.
New law provides that a self-insurance fund must not function as a means of sharing risks
of loss among the members of a risk management organization until the risk management
organization administering the fund has received, for general liability, property coverage, and
any other pooled line of coverage risks, an annual gross premium, calculated in accordance
with the applicable manual premium rate or rates.
New law provides that an affiliate or subsidiary of a local housing authority must not be
liable to such risk management organization, to any other member, or to any claimant against
the organization itself or another member, except for payment of contributions provided for
in the agreement between the affiliate or subsidiary of the local housing authority and the risk
management organization.
New law provides that a risk management organization must administer the assets of a self-
insurance fund to maintain appropriate levels of reserves and to ascertain full and timely
payment of all fund obligations.
New law provides that each risk management organization must file with the commissioner
of insurance, within six months of the end of the organization fiscal year, a certified audited
financial statements and a review of its operations and general condition by a certified
independent casualty actuary.
New law provides that no risk management organization must become operative until issued
a certificate of authority by the commissioner of insurance.
New law provides that a risk management organization must establish and maintain an
aggregate loss fund or stop loss provision as part of the excess insurance policy placements
in an amount of not more than $1,500,000 for each risk underwritten.
New law provides that workers' compensation coverage must provide statutory workers'
compensation benefits coverage, including employers' liability coverage with limits of at
least $1,000,000.
New law provides that the provisions of proposed law regarding excess insurance must apply
only to self-insurance funds.
New law provides that the provisions of proposed law must not be construed to reduce or
limit a participating affiliate or subsidiary of a local housing authority member's rights or
obligations with respect to its employees.
New law provides that a risk management organization must maintain at all times a contract
or contracts of specific excess insurance of at least $1,000,000 per occurrence and a contract
of annual aggregate excess insurance of at least $2,000,000 dollars with respect to general
liability claims.
New law provides that excess insurance carriers selected by the risk management
organization must have a current A.M. Best rating of A-VII as of the date of commencement
of coverage.
New law provides that the organization must maintain at all times contracts of excess
insurance with respect to all lines of coverage as may be approved by the board of trustees
of the organization in such amounts as determined by the board of trustees of the
organization.
New law provides that the legislative auditor may examine and audit the books and accounts
of any fund established under new law. Further provides that each participating affiliate or
subsidiary of a local housing authority member may request an examination and audit by its
representatives of any self-insurance funds.
Effective June 18, 2022.
(Adds R.S. 33:5081-5089)