# Title 26.1 — Insurance

## Chapter 26.1-23.1 — Government Self-Insurance Pools

### § 26.1-23.1-01. Government self-insurance pools - Regulation - Reinsurance.

1. Any two or more entities that have united to self-insure against their legal liability under
chapter 32-12.1 or any state agency that unites with another state agency or political
subdivision, or both, to self-insure against their legal liabilities are subject to the
provisions of this chapter with the exception of a city and its park district established
pursuant to chapter 40-49. Government self-insurance pools may only provide
coverage of the following types for pool members, their officers, employees, and
agents:
a. Casualty insurance, including general, public officials, and professional liability
coverages. However, if a court determines by clear and convincing evidence a
governing body of a political subdivision took intentional action through an
ordinance, administrative rule, or any other official action in violation of any state
law, the political subdivision is liable to the self-insurance pool for all attorney
fees, expenses, and costs incurred defending the action.
b. Automobile insurance, including motor vehicle liability insurance coverage,
security for motor vehicles owned or operated as required by chapter 26.1-41,
and protection against other liability and laws associated with the ownership of
motor vehicles and automobile physical damage coverages.
c. Property insurance, including inland marine coverage, money and securities
coverage, and extra expense coverage. However, this subdivision does not
authorize government self-insurance pools to write those types of insurance
coverages offered by the state fire and tornado fund under the provisions of
chapter 26.1-22 as they existed on December 31, 1988, unless a government
self-insurance pool enters a contract with the office of management and budget to
provide services for the state fire and tornado fund under section 26.1-22-02.
d. Other coverages authorized by the commissioner and necessary to a pool's
membership.
2. A government self-insurance pool may not expose itself to loss on any single risk or
hazard in an amount exceeding ten percent of the amount of its admitted assets
unless the pool obtains excess insurance or reinsurance with insurance companies
approved for such business by the insurance commissioner.
### § 26.1-23.1-02. Government self-insurance pools not insurers.

Any government self-insurance pool organized under chapter 32-12.1 is not an insurance
company or insurer. The coverages provided by the pools and the administration of the pools do
not constitute the transaction of insurance business. Participation in a government
self-insurance pool under this chapter does not constitute a waiver of any existing immunities
otherwise provided by the constitution or laws of this state. In all respects not specifically
provided for under this chapter, a government self-insurance pool is subject to chapters 26.1-01,
26.1-02, 26.1-04, 26.1-25, and 26.1-26 with the exception of sections 26.1-26-06, 26.1-26-07,
and 26.1-26-13.1 relating to insurance companies generally.
### § 26.1-23.1-03. Government self-insurance pool approval from the commissioner.

Before the insurance commissioner authorizes the operation of a government self-insurance
pool, the pool shall provide the following:
1. A financial plan setting forth:
a. The insurance coverages to be offered by the pool, applicable deductible levels,
and the maximum level of claims to be self-insured against.
b. The amount of cash reserves to be set aside for the payment of claims.
c. The amount of aggregate excess insurance or reinsurance coverage to be
purchased in the event that the pool's resources are exhausted in a given fiscal
period.

2. A plan of management which must provide the following:
a. The means of establishing the governing authority of the pool and, if the
governing authority of the pool is set forth in articles of incorporation, the articles
must be filed in the office of the secretary of state and a certified copy must be
filed with the commissioner. The commissioner may not issue a certificate to the
pool if, in the commissioner's judgment, the company's name too closely
resembles the name of an existing corporation or is liable to mislead the public.
b. The responsibility of the governing authority with regard to fixing contributions to
the pool by participating government political subdivisions, maintaining reserves,
levying and collecting assessments for deficiencies, disposing of surplus, and
administering the pool in the event of termination or insolvency.
c. The basis upon which new members may be admitted to, and existing members
may leave or have membership terminated by, the pool.
d. The identification of funds and reserves by exposure areas.
e. Other provisions necessary or desirable for the operation of the pool.
3. A plan for the election by pool members of a governing authority, which must be a
board of directors for the pool.
### § 26.1-23.1-04. Annual financial statements required - Confidentiality.

1. Every government self-insurance pool authorized by the insurance commissioner shall
file with the commissioner on or before March thirty-first of each year an audited
statement of its financial condition and business for the year ending on the preceding
December thirty-first. The financial statement must be audited by an independent
certified public accountant and the financial statement must be in a form prescribed or
approved by the commissioner. The financial statement must be verified by the
signature and oath of the pool's authorized representative. If a self-insurance pool fails
to provide for the audited financial statement required by this section, the insurance
commissioner shall have the audit performed at the expense of the pool. All working
papers of the commissioner's staff are confidential and not open for public inspection
until the report is final unless the commissioner declares that the material or any part
of the material is not confidential. If a self-insured pool is found to be in a deficit
condition, the pool shall file a financial plan acceptable to the commissioner to correct
the deficit condition.
2. At least triennially, and at such other times as the insurance commissioner deems
necessary, the commissioner shall inspect and examine the affairs of every
government self-insurance pool. The commissioner shall conduct examinations of
each self-insured government pool and all expenses and costs relating to the
examination must be paid by the pool.
3. The insurance commissioner shall monitor the financial solvency of government
self-insurance pools to ensure that a pool's liabilities for claims, present and
contingent, and other expenses are at no time greater than the pool's assets. The
commissioner may enjoin a self-insured government pool from conducting further
business or take other appropriate regulatory action whenever in the commissioner's
judgment a pool is insolvent or otherwise financially impaired.
### § 26.1-23.1-05. Investment of assets - Subsidiary insurance company coverage.

A government self-insurance pool may only invest its funds and accumulations in those
investments described in sections 26.1-05-19 and 26.1-10-02. If a government self-insurance
pool investment is made under section 26.1-10-02, a resulting subsidiary insurance company
may not write insurance coverage for:
1. North Dakota governmental entities, which competes with coverage offered by the fire
and tornado fund under chapter 26.1-22 as that chapter existed on December 31,
1988;
2. Individuals;
3. For-profit organizations;

4. Nonprofit hospitals, clinics, nursing homes, churches, fraternal organizations, or
organizations not performing quasi-governmental functions; or
5. Agricultural business cooperatives.
### § 26.1-23.1-06. Pool reserve records confidential - Open records.

1. Information regarding that portion of the funds or liability reserves of a government
self-insured pool established for purposes of satisfying a specific claim or cause of
action is confidential. A person is not entitled to discover that portion of the funds or
liability reserves established for purposes of satisfying a claim or cause of action,
except that the reserve is discoverable in any supplementary or ancillary proceeding to
enforce a judgment against the pool or a governmental entity participating in the pool.
2. Unless otherwise provided by law, a government self-insurance pool record, as
defined under section 44-04-17.1, is subject to chapter 44-04.
### § 26.1-23.1-07. Self-insurance contracts - Approval of rates and forms.

No insurance policy, certificate, contract, agreement, or evidence of participation may be
issued or delivered by a self-insured government pool nor may any application, rider, or
endorsement be used in connection therewith until the rate and form thereof have been filed
and approved by the insurance commissioner under sections 26.1-30-19 through 26.1-30-21.
### § 26.1-23.1-08. Government self-insurance pool - Report.

A government self-insurance pool organized under this chapter shall provide a report to the
legislative management by September thirtieth of each even-numbered year. The report must
include information on activities of the pool, including the claims activity, claims payment history,
balances, a history of complaints, and executive staff and board compensation.
