§ 45-5-20.1. Power of city and town councils and regional school districts to jointly establish
an insurance corporation, to obtain insurance, and to enter into a cooperative risk
management program.
(a) Cities and town councils, school committees, water and fire districts may, through
passage of a resolution, establish agreements between two (2) or more cities, town
councils, school committees, and water and fire districts for obtaining for obtaining
or effecting insurance by self insurance, for obtaining or effecting insurance from
any insurer authorized to transact insurance in the state, or for obtaining and effecting
insurance secured in accordance with any other method provided by law, or by combination
and of the provisions of this section for obtaining and effecting insurance. Agreements
made pursuant to this section may provide for pooling of self insurance reserves,
risks, claims and losses, and of administrative expenses associated with the same,
among local government units.
(b) For purposes of this section the term "Eligible Entities� shall mean any city, town,
school committee, water or fire district, or other public or quasi-municipal authority,
agency or entity, or organization that is an instrumentality of such cities or towns,
or any group of such cities or towns, authorities, agencies or entities which is a
member of the corporations created pursuant to the provisions of this section.
(c) To accomplish the purposes of this section any two (2) or more cities, towns, school
committees, or water and fire districts, may authorize the creation of separate corporations
(the "corporation�) for the purpose of: (1) issuing to the eligible entities policies
of insurance and reinsurance of all types and categories, including, without being
limited to, the following types and categories: property, casualty, and life, accident,
and health insurance, and (2) developing and administering an interlocal risk management
program. The corporations, in addition, may have as their purposes reducing the risk
of its members; safety engineering; distributing, sharing, and pooling risks; acquiring
excess loss insurance; and processing and defending claims against the members of
the corporations. Any contributions made to the corporations for the purpose of distributing,
sharing, or pooling risks shall be made on actuarially sound basis, and the corporations
shall have an audit performed annually, copies of which shall be provided to the members
of the corporations, and the auditor general; discrete accounts shall be kept for
each risk management program developed and administered by the corporations.
(d) The corporations shall not be considered an insurance company and shall not be subject
to the provisions of the laws of the state of Rhode Island regulating insurance companies
and therefore shall in no way be regulated by the Rhode Island department of business
regulation.
(e) The corporations created pursuant to the provisions of this section will be created
by filing articles of incorporation pursuant to chapter 6 of title 7 entitled Rhode Island Nonprofit Corporation Act and the articles of incorporation
will be filed by an incorporator/incorporators designated by the city, town councils,
school committees, or water or fire districts, authorizing the creation of the corporation.
The articles of incorporation creating the corporations pursuant to the provisions
of this section may contain provisions, not inconsistent with this section, that the
incorporators determine to be desirable or useful in fulfilling the purposes set forth
in this section. The corporations created pursuant to the provisions of this section
will have the powers of a nonprofit corporation created under chapter 6 of title 7 entitled Rhode Island Nonprofit Corporation Act including, without being limited
to, the power to issue bonds, notes, and other obligations in any amounts and upon
any terms that the corporation's governing board determines.
(f) The corporations created pursuant to the provisions of this section, notwithstanding
the filing of its articles of incorporation pursuant to chapter 6 of title 7 entitled Rhode Island Nonprofit Corporation Act, (1) will be deemed to be public
corporations, instrumentality, and agency of the state of Rhode Island acting for
the benefit of the municipalities which are members of the corporations and its eligible
entities but will not constitute a department of the government of the state of Rhode
Island, and (2) will be deemed to be exercising public and essential governmental
functions of the state of Rhode Island. No part of the net earnings of the corporations
created pursuant to the provisions of this section will be distributable to, or inure
to the benefit of, any private person. The members of the governing board of the corporations
created pursuant to the provisions of this section will consist solely of chief executives,
chief elected officials, finance directors, or treasurers of municipalities, or any
other municipal officials that may be provided for in the bylaws of the corporations,
and the members shall receive no compensation for the performance of their duties
but each member may be reimbursed for his or her reasonable expenses incurred in carrying
out their duties.
(g) The bonds, notes, or other obligations issued by the corporations created pursuant
to the provisions of this section will not be deemed to constitute a debt or liability
or obligation of the state of Rhode Island or of any political subdivision of the
state or of any municipality which is a member of the corporation but will be payable
solely from the revenues or assets of the corporations.
(h) Notwithstanding any provision of this chapter or special or general law to the contrary,
each eligible entity which is a member of the corporations created pursuant to the
provisions of this section will be authorized to enter into contracts with the corporations
with respect to, among other matters, the payment of premiums and other payments,
for terms not exceeding twenty-five (25) years in duration. To the extent that the
obligation to pay premiums or make other payments under any contract is deemed to
constitute the incurring of indebtedness by an eligible entity the contract may nevertheless
be entered into without obtaining the approval of the electors of the city or town
notwithstanding the provisions of §§ 45-12-19 and 45-12-20 and notwithstanding any provisions of the city's or town's charter or any special
or general law to the contrary. Any contract may be entered into by an eligible entity
either prior to or subsequent to the making of any appropriations which may be needed
to carry out the obligations of the eligible entity under the contract.
(i) The property and assets of the corporations created pursuant to the provisions of
this section, the income of the corporations, and any bonds, notes, or other obligations
issued by the corporation, their transfer, and the income from these (including any
profits made on the sale thereof) will at all times be free from taxation by the state
of Rhode Island or any political subdivision or other instrumentality of the state
of Rhode Island, excepting inheritance, estate, and gift taxes with respect to the
bonds, notes, or other obligations issued by the corporations.
(j) Whenever the governing board of the corporations created pursuant to the provisions
of this section determines that the purposes for which the corporations were created
have been substantially fulfilled and all bonds, notes, or other obligations of the
corporations have been fully paid or adequate provision has been made for their payment,
the corporations may be dissolved in the manner provided for nonprofit corporations
pursuant to chapter 6 of title 7 entitled Rhode Island Nonprofit Corporation Act and, upon the corporations' dissolution,
title to all funds and assets of the corporation shall vest in and become the property
of the members of the corporation in proportions that are provided for in the corporation's
articles of incorporation.
(k) No corporations created pursuant to the provisions of this section shall be required
to pay any recording or filing fee or any transfer tax of any kind on account of papers
or instruments recorded or filed by it or on its behalf.
(l) No corporations created pursuant to the provisions of this section and no agent or
broker acting on behalf of the corporations shall be required to pay a surplus line
premium tax of any kind on premiums for any policies of insurance and reinsurance
to or from the corporations.