CHAPTER 401

FORMERLY

HOUSE BILL NO. 612

AS AMENDED BY HOUSE AMENDMENT NO. 1

AN ACT TO AMEND TITLE 18, DELAWARE CODE, TO ESTABLISH THE DELAWARE INSURANCE AUTHORITY, AND AUTHORIZING THE AUTHORITY TO ISSUE REVENUE BONDS NOT PLEDGING THE FULL FAITH AND CREDIT OF THE STATE OF DELAWARE AND TO PLEDGE ANY ASSETS OF THE AUTHORITY AS COLLATERAL SECURITY THEREFOR: AND AUTHORIZING THE FORMATION OF JOINT INSURANCE FUNDS AND AN EXCESS INSURANCE POOL, AND GRANTING TO ALL DELAWARE COUNTIES, MUNCIPALITIES, SCHOOL DISTRICTS, PARKING AUTHORITIES AND OTHER INSTRUMENTALITIES AND POLITICAL SUBDIVISIONS OF THE STATE OF DELAWARE THE POWER TO ENTER INTO LONG-TERM CONTRACTS WITH ANY JOINT INSURANCE FUND OR EXCESS INSURANCE POOL CREATED HEREBY".

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-Fourths of all members elected to each House thereof concurring therein):

Section 1. Amend Title 18, Delaware Code by adding a new Chapter to read as follows:

"CHAPTER 4. THE DELAWARE INSURANCE AUTHORITY

Section 401. Findings; Declaration of Policy

(a) It is determined and declared as a matter of legislative finding that:

(1) Delaware counties, municipalities, school districts, parking authorities and other instrumentalities and political subdivisions of the State of Delaware are finding liability and other insurance prohibitively expensive or impossible to obtain at any price.

(2) Certain private occupational groups and types of enterprise are suffering from the same prohibitive cost or unavailability of liability and other insurance.

(3) The uneconomic price or unavailability of insurance coverages for public and private risks exposes public bodies and private persons to catastrophic loss to the extent that the ability of governmental units to render services and the ability of private persons to function Is severely impaired, to the grave detriment of the safety, economic stability and utility of public bodies and private persons.

(4) The problems arising from the conditions found above may be alleviated by the adoption of self-insurance Joint Insurance Funds and an Excess Insurance Pool, but any Joint Insurance Fund or Excess Insurance Pool requires capitalization, which the Authority may provide.

(b) It Is further determined and declared that in order to aid In remedying such conditions and to implement the purposes of this chapter, there shall be created an Authority which shall be a body politic and corporate having the powers, duties and functions provided in this subchapter; that the creation of the Authority and the powers conferred upon such Authority under this chapter and the expenditure of monies pursuant to this chapter constitute a valid public purpose, and an essential governmental function, and the performance of a valid public function; that the enactment of the provisions hereinafter set forth is in the public interest and for the public benefit and welfare and Is hereby so declared to be as a matter of express legislative determination.

Section 402. Definitions.

(a) The following words, terms and phrases, when used in this Act, shall have the meanings ascribed to them In this Section, except where the context clearly indicates a different meaning:

(1) "Actuary" means a member of the American Academy of Actuaries who meets the qualification standards of the Academy."

(2) "Authority" means the Delaware Insurance Authority created by this subchapter.

(4) "Excess Insurance Pool" or "Pool" means a fund established by the universe of Joint Insurance Funds which pledge fixed amounts annually to the establishment of said fund, which Is dedicated to providing excess Insurance to its members.

(5) "Insurance Commissioner" means the Delaware Insurance Commissioner as provided for in 18 Del. C. Chapter 3.

(6) "Joint Insurance Fund" or "Fund" means a fund established by a group of persons who pledge fixed amounts annually to the establishment of a fund dedicated to providing certain Insurance coverage to its members.

(1) "Public Entity" means a county, incorporated municipality, school
district, parking authority or other instrumentality or political subdivision of the State of Delaware, excluding the State of Delaware Itself."

Section 403. Delaware Insurance Authority -- Established; Organization.

(a) There is hereby established a body corporate and politic, with corporate succession, to be known as The Delaware Insurance Authority." The Authority is hereby constituted as an instrumentality of the State exercising public and essential governmental functions, and the exercise by the Authority of the powers conferred in this chapter shall be deemed and held to be an essential governmental function of the State.

(b) The Authority shall consist of the Insurance Commissioner and six other members. The Insurance Commissioner shall hold office for the term for which elected and thereafter as provided by Article XV, Section 5 of the Constitution of the State of Delaware, unless earlier removed from office for reasonable cause as provided by Article III, Section 13 of the Constitution of the State of Delaware. Should a vacancy in the office of Insurance Commissioner occur, then the duties of the Insurance Commissioner hereunder shall be performed by the Deputy Commissioner established by 18 Del. C. §309. Until the full membership of the Authority has been filled or in the event a vacancy occurs in the membership of the Authority, a majority of members duly qualified shall exercise all powers of the Authority.

(c) The remaining six members of the Authority shall be selected as follows: (I) Three members shall be appointed by the Governor.

(2) One member shall be appointed by the President Pro Tempore of the Senate.

(3) One member shall be appointed by the Speaker of the House of
Representatives.

(4) One member shall be appointed by the Insurance Commissioner.

(5) All members selected pursuant to this subsection (c) shall become members of the Authority upon certification by the appointing officials empowered in subsection (c) (1), (2), (3) and (4) of this Section and shall serve a term of four years from the date of appointment unless sooner terminated as a member of the Authority for cause. Except that the members initially appointed pursuant to
Subsections (2) and (3) hereof and one of the members initially appointed pursuant to Subsection (1) hereof shall serve an initial term of two years. At the end of each member's four-year term or in the event of death, disability of removal of a member, his or her successor shall be selected in the same manner as his or her predecessor. Authority members may succeed themselves.

(d) The insurance Commissioner shall be the Chairman of the Authority. Subject to

Its annual budget as approved by the Governor and the General Assembly, the Authority shall employ such persons as It shall determine are necessary to fulfill the powers granted to the Authority in this chapter. The Chairman shall appoint an employee of the Insurance Department to serve as non-voting Secretary-Treasurer of the Authority, who shall serve at the pleasure of the Chairman. The Secretary-Treasurer shall have such duties as may be assigned by the Chairman, including serving as financial control person and being Ilason person with members of the Authority, and the Department of Insurance.

(e) Notwithstanding any other law, neither the Insurance Commissioner nor any officer or employee of the State shall be deemed to have forfeited or shall forfeit his office or employment or any benefits or emoluments thereof by reason of his service as an officer of the Authority.

(f) The Authority may be dissolved by act of the General Assembly on condition that the Authority has no debts or obligations outstanding or that provision has been made for the payment or retirement of such debts or obligations. Upon any such dissolution of the Authority, all property, funds and assets thereof shall be vested in the State.

(g) The Authority shall prepare an annual budget for each fiscal year of the Authority (the "annual budget") and shall submit the annual budget to the Budget Director and General Assembly. The annual budget need not include amounts representing expenditures for debt service on bonds.

(h) The Authority shall cause an audit of its books and accounts to be made annually by a certified public accountant licensed to practice in the State. In
addition, the Authority shall make an annual report of its activities to the Governor which shall set forth a complete operating and financial statement covering the Authority's operations during the year and shall include the report of the certified public accountant who makes the audit of the Authority's books and accounts. The
Authority shall furnish a copy of the annual report to the Speaker of the House of Representatives and the President Pro Tempore of the Senate, the Auditor of Accounts and the Controller General. The Auditor of Accounts may also audit the books and accounts of the Authority and the Funds In accordance with applicable law.

(I) No member, officer, employee or agent of the Authority shall be Interested, either directly or indirectly, in any project or in any contract, sale, purchase, lease or transfer of real or personal property to which the Authority is a party. The existence of any such interest shall not affect the validity of bonds issued pursuant to this subchapter.

(j) Any net earnings of the Authority (beyond those necessary for retirement of any indebtedness or to implement the public purposes of this subchapter) shall not Inure to the benefit of any person other than the State.

(k) The Authority shall hire or contract with service providers for a period not longer than 5 years. The service providers shall administer: claims against any Fund,
Reinsurance, Accounting, Data Processing, Risk Management and General Fund Operations.

(1) The Authority shall contract with an Actuary for a period not exceeding five

years. The Actuary shall study, develop and propose, from time to time, to the

Authority and the funds, rates and pricing for initial and later assessments of the members of each Fund, to develop and propose surplus fund bond sizing, and to review on no less than an annual basis the claims reserves of all Funds, to provide the Authority with actuarial advice and counsel as to reserve adequacy and other rate and claims statistical information as required by the Authority.

(m) The Authority shall contract with a general counsel for a period not to exceed

five years. General counsel shall be admitted to practice before the Supreme Court of

Delaware. General counsel shall provide general legal advice and counsel to the

Authority on such matters as may be required by Authority.

(n) The Authority shall promulgate rules and regulations for each Fund.

Section 404. Joint Insurance Funds for Public Entities.

(a) There Is hereby established authority to form a Public Entity Joint Insurance Fund for Public Entities In the State.

(b) Public entities which are located in contiguous States and which currently share an Insurance program with a public entity located within Delaware may be eligible for membership in the appropriate Joint Insurance Fund If It meets the membership requirements imposed upon Delaware entitles.

(c) The governing body of any public entity may by resolution or ordinance, as appropriate, agree to join together with any other public entity or entitles, subject to the restrictions of subsection (a) of this Section, to establish a Joint Insurance Fund for the purpose of Insuring liability, and worker's compensation as provided in this Act and may appropriate such moneys as are required therefor.

(a) Upon the establishment of a Public Entity Joint Insurance Fund, the Governor
and the Insurance Commissioner shall each appoint two members to the Board of Directors of the Public Entity Joint Insurance Fund, to serve for a term of four years. The
Insurance Commissioner shall serve as the fifth member.

(e) (1) The directors of a Joint Insurance Fund shall have the powers and authority granted to them by regulation of the Insurance Department.

(2) The directors may Invest the funds, including workers' compensation funds, as authorized under the provisions of regulations of the Insurance Department, utilizing prudent casualty and surety company investment practices.

(3) The board of directors of any Joint Insurance Fund established pursuant to the provisions of this Section shall be subject to and operate In compliance with the provisions of regulations of the Insurance Department.

(f) The Insurance Commissioner shall prepare and after approval, by resolution, of the governing body of each participating public entity, shall adopt bylaws for the Joint Insurance Fund. The bylaws shall Include but not be limited to:

(1) Procedures for the organization and administration of the Joint Insurance Fund and the Fund board of directors of the Fund. The procedures may include the designation of one member public entity to serve as the lead agency to be responsible for the custody and maintenance of the assets of the Fund and such other duties as may be assigned by the directors of the Fund;

(2) Procedures for the assessment of members for their contributions to the Fund and for the collection of contributions in default;

(3) Procedures for the maintenance and administration of appropriate reserves In accordance with sound actuarial principles;

(4) Procedures for the purchase of commercial direct Insurance or excess Insurance;

(5) Contingency plans for paying losses In the event that the Fund Is exhausted;

(6) Procedures governing loss adjustment and legal fees;

(7) Procedures for the joining of the Fund by a non-member public entity;

(8) Procedures for the withdrawal from the Fund by a public entity;

(9) Procedures for the expulsion of a member public entity;

(10) Procedures for the termination and liquidation of the Joint Insurance Fund and the payment of Its outstanding obligations; and

(11) Such other procedures and plans as the insurance Commissioner may require by rule or regulation.

(g) The directors shall prepare, or cause to be prepared, a plan of risk management for the Joint Insurance Fund. The plan shall include but not be limited to:

(1) The perils or liability to be insured against;

(2) Limits of coverage, whether self-Insurance, direct Insurance purchased from a commercial carrier or excess Insurance;

(3) Procedures governing loss adjustment;

(4) Procedures for establishing case reserves;

(5) The method of assessing contributions to be paid by each member of the Fund;

(6) Coverage to be purchased from a commercial Insurer;

(7) The amount of risk to be retained by the Fund;

(8) Excess Insurance to purchased; and

(1) Such other procedures and information as the Insurance Commissioner may require by rule or regulation.

(h) No Joint Insurance Fund shall begin providing Insurance coverage to its member public entities until Its bylaws and plan of risk management have been approved as hereinafter provided.

(1) The directors of each Joint Insurance Fund shall concurrently file with the Insurance Commissioner for his approval a copy of the Fund's bylaws adopted pursuant to subsection (f) of this Section and a copy of the fund's plan of risk management prepared pursuant to subsection (g) of this Section.

(2) Within 30 working days of receipt, the Insurance Commissioner shall either approve or disapprove the bylaws or plan of risk management of any Joint Insurance Fund. If the Insurance Commissioner shall fail to either approve or disapprove the bylaws or plan of risk management within said 30 working day period, the bylaws or plan of risk management shall be deemed approved. If any bylaws or plan of risk management shall be disapproved, the Insurance Commissioner shall set forth in writing the reasons for disapproval. Upon receipt of the notice of disapproval, the directors of the affected Joint Insurance Fund may request a public hearing. The public hearing shall be convened by the Insurance Commissioner in a timely manner. Within twenty (20) calendar days after the public hearing, the Insurance

Commissioner shall reaffirm, reverse or partially reverse his disapproval in writing. The action of the Commissioner shall be final and shall not be appealable.

(i) Upon the approval of Its bylaws and plan of risk management pursuant to the provisions of subsection (h) of this Section, a Joint Insurance Fund may provide insurance coverage to its member public entitles by self-insurance, the purchase of commercial insurance or excess insurance, or any combination thereof.

(j) The directors may, from time to time, amend the bylaws and plan of risk management of the Fund; provided, however, that no such amendment shall take effect until approved as hereinafter provided:

(13 The directors shall file with the Insurance Commissioner for his approval a copy of any amendment to the bylaws of the Fund upon approval, by resolution, of the governing body of each member public entity, or any amendment to the plan of risk management upon adoption by the directors.

(2) Within 30 working days of receipt, the Insurance Commissioner shall either approve or disapprove any amendment to the bylaws or plan of risk management. If the Insurance Commissioner shall fall to either approve or disapprove the amendment within that 30 working day period, the amendment shall be deemed approved. If any amendment shall be disapproved, the Insurance Commissioner shall set forth in writing the reasons for disapproval. Upon receipt of the notice of disapproval, the directors of the affected Joint Insurance Fund may request a public hearing. The public hearing shall be convened by the Insurance Commissioner In a timely manner. Within twenty (20) calendar days after the public hearing, the Insurance Commissioner shall reaffirm, reverse or partially reverse his disapproval in writing. The action of the Commissioner shall be final and shall not be appealable.

(k) The Insurance Commissioner Is hereby authorized to suspend or terminate the authority of any Joint Insurance Fund, or to assume control of the Fund, or to direct or take any action he may deem necessary for good cause, to enable a Fund to meet its obligations and cover its expected losses or to liquidate, rehabilitate or otherwise modify its affairs. Such action shall be taken by the Insurance Commissioner in the event of:

(1) A failure to comply with the rules and regulations promulgated by the Insurance Commissioner or with any of the provisions of this Section;

(2) A failure to comply with a lawful order of the Insurance Commissioner; or

(3) A determination of the financial condition of the Fund to the extent that It causes an adverse effect on the ability of the Joint Insurance Fund to pay expected losses.

(4) A failure to join the Excess Insurance Pool established in accordance with Section 406 of this Act or to agree to be bound by and comply with the Excess Insurance Pool's bylaws or plan of risk management.

(1) The Insurance Commissioner may, in his discretion, require the directors of any Fund to file copies of any agreement or contracts entered into by the directors of the Fund, or any other pertinent documents as he may deem necessary.

(m) The Fund directors shall cause an annual audit to be conducted by an independent certified public accountant and an opinion on reserves for incurred losses and loss adjustment expenses to be signed by an actuary, in accordance with the rules and regulations promulgated by the Insurance Commissioner pursuant to subsection (q) of this Section. Copies of every audit and opinion shall be submitted to the Insurance Commissioner within 30 working days of its completion.

(n) The Insurance Commissioner may conduct Such examinations of any Joint Insurance Fund as he deems necessary. The expense of any such examination shall be borne by the
affected Fund.

(o) Any public entity electing to join a Joint Insurance Fund pursuant to this chapter is hereby granted the power, to enter into contracts of any duration obliging the entity to make periodic payments to the Joint Insurance Fund, without the need for annual appropriations, The power hereby conferred shall be exercised by the adoption of a resolution of the legislative or governing body of the public entity conforming to the requirements for other resolutions adopted by the governing or legislative body of the public entity. The contracts herein provided shall not be counted against any charter
or other limitation on general obligation debt of the public entity.

(p) Within 60 days after the effective date of this Section, the Insurance Commissioner shall promulgate rules and regulations to effectuate the purposes of this Section. Such rules and regulations shall include, but not be limited to,

establishment, operation, modification and dissolution of Joint Insurance Funds
established pursuant to provisions of this Section.

Section 405. Joint Insurance Funds for Private Persons.

(a) Individuals, general or limited partnerships, and corporations having a facility located within local units of government which have joined The Delaware Public Entity Joint Insurance Fund under provisions of Section 404 of this Act by appropriate legal action agree to join together to establish a Joint Insurance Fund for the purpose of insuring liability, and workers' compensation as provided In this Act, and may contribute such moneys as are required therefore, but the members of any such Fund- must share a natural affinity as demonstrated In a definition approved by the Insurance Commissioner. Only one joint Insurance fund may exist for any approved defined affinity group.

(b) Upon the establishment of a Joint Insurance Fund, the Governor and the Insurance Commissioner shall each appoint two members to the Board of Directors of the Joint Insurance Fund, to serve for a term of four years. The Insurance Commissioner shall serve as the fifth member.

(c) (1) The directors of a Joint Insurance Fund shall have the powers and authority granted to them by regulation of the Insurance Department.

(2) The directors may Invest any and all moneys of the Fund from whatever source derived as authorized by regulations of the Insurance Department, utilizing prudent casualty and surety company Investment practices.

(3) The board of directors or the executive committee, as the case may be, of any Joint Insurance Fund established pursuant to the provisions of this Section shall be subject to and operate In compliance with the provisions of regulations of the Insurance Department.

(d) The Insurance Commissioner shall prepare and after approval of each

participating entity, shall adopt bylaws for the Joint Insurance Fund. The bylaws shall
Include but not be limited to:

(1) Procedures for the organization and administration of the Joint Insurance Fund and the Fund board of directors

(2) Procedures for the assessment of members for their contributions to the Fund and for the collection of contributions in default;

(3) Procedures for the maintenance and administration of appropriate reserves in accordance with sound actuarial principles,

(4) Procedures for the purchase of commercial direct Insurance or excess insurance,

(5) Contingency plans for paying losses in the event that the Fund is exhausted,

(6) Procedures governing loss adjustment and legal fees;

(7) Procedures for the joining of the Fund by a non-member entity;

(8) Procedures for the withdrawal from the Fund by an entity;

(9) Procedures for the expulsion of a member entity;

(10) Procedures for the termination and liquidation of the Joint Insurance Fund and the payment of its outstanding obligations; and

(11) Such other procedures and plans as the Insurance Commissioner may require by rule or regulation.

(e) The directors shall prepare, or cause to be prepared, a plan of risk management for the Joint Insurance Fund. The plan shall Include but not be limited to:

(1) The perils or liability to be insured against;

(2) Limits of coverage, whether self-Insurance, direct insurance purchased from a commercial carrier or excess Insurance;

(3) Procedures governing loss adjustment;

(4) Procedures for establishing case reserves;

(5) The method of assessing contributions to be paid by each member of the Fund;

(6) Coverage to be purchased from a commercial insurer;

(7) The amount of risk to be retained by the Fund;

(8) Excess insurance to be purchased; and

(9) Such other procedures and information as the Insurance Commissioner may require by rule or regulation.

(f) No Joint Insurance Fund shall begin providing Insurance coverage to Its member entities until Its bylaws and plan of risk management have been approved as hereinafter provided:

(1) The directors of each Joint Insurance Fund shall concurrently file with the Insurance Commissioner for his approval a copy of the Fund's bylaws adopted pursuant to subsection (d) of this Section and a copy of the fund's plan of risk management prepared pursuant to Subsection (e) of this Section.

(2) Within 30 working days of receipt, the Insurance Commissioner shall either approve or disapprove the bylaws or plan of risk management of any Joint Insurance Fund. If the Insurance Commissioner shall fall to either approve or disapprove the
bylaws or plan of risk management within said 30 working day period, the bylaws or plan of risk management shall be deemed approved. If any bylaws or plan of risk management shall be disapproved, the Insurance Commissioner shall set forth In writing the reasons for disapproval. Upon receipt of the notice of disapproval, the directors of the affected Joint Insurance Fund may request a public hearing. The public hearing shall be convened by the Insurance Commissioner In a timely manner. Within twenty (20) calendar days after the public hearing, the Insurance
Commissioner shall reaffirm, reverse or partially reverse his disapproval in writing. The action of the Commissioner shall be final and shall not be appealable.

(g) Upon the approval of its bylaws and plan of risk management pursuant to the provisions of subsection (f) of this Section, a Joint Insurance Fund may provide Insurance coverage to Its member entitles by self-Insurance, the purchase of commercial insurance or excess insurance, or any combination thereof.

(h) The directors may, from time to time, amend the bylaws and plan of risk management of the Fund, provided, however, that no such amendment shall take effect until approved as hereinafter provided:

(i) The directors shall file with the Insurance Commissioner for his approval a copy of any amendment to the bylaws of the Fund upon approval, by resolution, of the governing body of each membe, entity, or any amendment to the plan of risk management upon adoption by the directors.

(2) Within 30 working days or receipt, the Insurance Commissioner shall either approve or disapprove any amendment to the bylaws or plan of risk management. If the insurance Commissioner shall fail to either approve or disapprove the amendment within that 30 working day period, the amendment shall be deemed approved. If any amendment shall be disapproved, the Insurance Commissioner shall set forth in writing the reasons for disapproval. Upon receipt of the notice of disapproval, the directors of the affected Joint Insurance Fund may request a public hearing. The public hearing shall be convened by the Insurance Commissioner In a timely manner. Within twenty (20) calendar days after the public hearing, the Insurance Commissioner shall reaffirm, reverse or partially reverse his disapproval in writing. The action of the Commissioner shall be final and shall not be appealable.

(1) The Insurance Commissioner Is hereby authorized to suspend or terminate the authority of any Joint Insurance Fund, or to assume control of the Fund, or to direct or take any action he may deem necessary for good cause, to enable a Fund to meet its obligations and cover its expected losses or to liquidate, rehabilitate or otherwise modify its affairs. Such action shall be taken by the Insurance Commissioner in the event of:

(1) A failure to comply with the rules and regulations promulgated by the Insurance Commissioner or with any of the provisions of this Section;

(2) A failure to comply with a lawful order of the Insurance Commissioner; or

(3) A determination of the financial condition of the Fund to the extent that It causes an adverse effect on the ability of the Joint Insurance Fund to pay expected losses.

(4) A failure to join the Excess Insurance Pool established In accordance with Section 406 of this Act or to agree to be bound by or comply with the Excess Insurance Pool's bylaws or plan of risk management.

(j) The Insurance Commissioner may, in his discretion, require the directors of any Fund to file copies of any agreement or contracts entered into by the directors of the Fund, or any other pertinent documents as he may deem necessary.

(k) The Fund directors shall cause an annual audit to be conducted by an Independent certified public accountant and an opinion on reserves for Incurred losses and loss adjustment expenses to be signed by an actuary, in accordance with the rules and regulations promulgated by the Insurance Commissioner pursuant to subsection (n) of this Section. Copies of every audit and opinion shall be submitted to the Insurance
Commissioner within 30 working days of its completion.

(1) The Insurance Commissioner may conduct such examinations of any Joint Insurance Fund as he deems necessary. The expense of any such examination shall be borne by the affected Fund.

(m) Within 60 days after the effective date of this Section, the Insurance Commissioner shall promulgate rules and regulations to effectuate the purposes of this Section. Such rules and regulations shall include, but not be limited to,

establishment, operation, modification and dissolution of Joint Insurance Funds established pursuant to provisions of this Section.

Section 406. Excess Insurance Pools

(a) If more than one Joint Insurance Fund Is established pursuant to Sections 404 and 405 of this Act, the board of directors of any Joint Insurance Fund shall by resolution agree to Coln together with any other Joint Insurance Fund to establish an Excess Insurance Fund for the purpose of providing various layers of excess insurance liability, and worker's compensation as provided in this Act and may appropriate such moneys as are required therefor. The boards of directors of the Joint Insurance Funds shall, by resolution, further agree to be bound by and comply with the duly approved bylaws and plan of risk management of the Excess Insurance Pool, and provided in subsections (d), (3) and (f) of this Section.

(a) Upon the establishment of a Excess Insurance Fund, the Governor and the
Insurance Commissioner shall each appoint two members to the Board of Directors of the
Excess Insurance Fund, to serve for a term of four years. The Insurance Commissioner
shall serve as the fifth member.

(a) (I) The governors of the Excess Insurance Pool shall have the powers and

(a) authority granted to them by regulation of the Insurance Department.

(2) The governors may invest the funds, including workers' compensation funds, as authorized under the provisions of regulations of the Insurance Department, utilizing prudent casualty and surety company investment practices.

(3) The board of governors of the Excess Insurance Pool established pursuant to the provisions of this Section shall be subject to and operate in compliance with the provisions of regulations of the Insurance Department.

(d) The Authority shall prepare and after approval, by resolution, of the board of directors of each Joint Insurance Fund, shall adopt bylaws for the Excess Insurance Pool. The bylaws shall include but not be limited to:

(1) Procedures for the organization and administration of the Excess Insurance Pool, the Pool board of governors of the Pool;

(2) Procedures for the assessment of members for their contributions to the Pool and for the collection of contributions in default;

(3) Procedures for certifying annually to the Commissioner of Insurance, prior to the commencement of each pool assessment year, that each member Joint Insurance Fund has assessed or is in process of assessing its members' contributions in sufficient amount to pay the assessment of the Pool to the Fund.

(4) Procedures for the maintenance and administration of appropriate reserves in accordance with sound actuarial principles;

(5) Procedures for the purchase of commercial excess insurance;

(6) Contingency plans for paying losses in the event that the Pool's funds are exhausted;

(1) Procedures governing loss adjustment and legal fees;

(2) Procedures for the joining of the Pool by a newly established Joint Insurance Fund;

(1) Procedures for the expulsion of a Joint Insurance Fund;

(2) Procedures for the termination and liquidation of the Excess Insurance Pool and the payment of its outstanding obligations; and

(3) Such other procedures and plans as the Insurance Commissioner may require by rule or regulation.

(e) The governors shall prepare, or cause to be prepared, a plan of risk management for the Excess Insurance Pool. The plan shall Include but not be limited to:

(1) The perils or liability to be insured against;

(2) Limits and layers of coverage, whether self-insurance or excess insurance from a commercial carrier;

(3) Procedures governing loss adjustment;

(4) Procedures for establishing case reserves;

(5) The method of assessing contributions to be paid by each member of the pool;

(6) Coverage to be purchased from a commercial insurer;

(7) The amount of risk to be retained by the Pool;

(8) Excess insurance to be purchased; and

(9) Such other procedures and information as the Insurance Commissioner may require by rule or regulation.

(f) The Excess Insurance Pool shall not begin providing insurance coverage of its member Joint Insurance Funds until its bylaws and plan of risk management have been approved as hereinafter provided:

(1) The governors of the Pool shall concurrently file with the Insurance Commissioner for his approval a copy of the Pool's bylaws adopted pursuant to subsection (d) of this Section and a copy of the Pool's plan of risk management prepared pursuant to subsection (e) of this Section.

(2) Within 30 working days of receipt, the Insurance Commissioner shall either approve or disapprove the bylaws or plan of risk management. If the Insurance
Commissioner shall fall to either approve or disapprove the bylaws or plan of risk management within said 30 working day period, the bylaws or plan of risk management shall be deemed approved. If any bylaws or plan of risk management shall be
disapproved, the Insurance Commissioner shall set forth in writing the reasons for disapproval. Upon receipt of the notice of disapproval, the governors may request a public hearing. The public hearing shall be convened by the Insurance
Commissioner in a timely manner. Within twenty (20) calendar days after the public hearing, the Insurance Commissioner shall reaffirm, reverse or partially reverse his disapproval in writing. The action of the Commissioner shall be final and
shall not be appealable.

(g) Upon the approval of its bylaws and plan of risk management pursuant to the provisions of subsection (f) of this Section, the Pool may provide insurance coverage to Its member Funds by self-insurance or the purchase of commercial excess insurance or any combination thereof.

(h) The governors may, from time to time, amend the bylaws and plan of risk management of the Pool; provided, however, that no such amendment, shall take effect until approved as hereinafter provided:

(1) The governors shall file with the Insurance Commissioner for his approval a copy of any amendment to the bylaws of the Pool upon approval, by resolution, of the boards of directors of each member Fund, or any amendment to the plan of risk management.

(2) Within 30 working days or receipt, the Insurance Commissioner shall either approve or disapprove any amendment to the bylaws or plan of risk management. If the Insurance Commissioner shall fall to either approve or disapprove the amendment within the 30 working day period, the amendment shall be deemed approved. If any
amendment shall be disapproved, the Insurance Commissioner shall set forth In

writing the reasons for disapproval. Upon receipt of the notice of disapproval,

the governors of the Pool may request a public hearing. The public hearing shall

be convened by the Insurance Commissioner In a timely manner. Within twenty (20) calendar days after the public hearing, the Insurance Commissioner shall reaffirm, reverse or partially reverse his disapproval In writing. The action of- the Commissioner shall be final and shall not be appealable.

(I) The Insurance Commissioner Is hereby authorized to suspend or terminate the authority of the Pool, or to assume control of the Pool, or to direct to take any action he may deem necessary for good cause, to enable the Pool to meet Its obligations and cover its expected losses or to liquidate, rehabilitate or otherwise modify Its affairs. Such action shall be taken by the Commissioner In the event of:

(1) A failure to comply with the rules and regulations promulgated by the Insurance Commissioner or with any of the provisions of this Section;

(2) A failure to comply with lawful order of the Insurance Commissioner; or

(3) A determination of the financial condition of the Pool to the extent that It causes an adverse effect on the ability of the Pool to pay expected losses.

(j) The Insurance Commissioner may, In his discretion, require the governors of the Pool to file copies of any agreement or contracts entered into by the directors of the Pool, or any other pertinent documents as he may deem necessary.

(k) The Pool governors shall cause an annual audit to be conducted by an Independent certified public accountant and an opinion on reserves for incurred losses and loss adjustment expenses to be signed by an actuary, In accordance with the rules and regulations promulgated by the Insurance Commissioner pursuant to subsection (n) of this Section. Copies of every audit and opinion shall be submitted to the Insurance
Commissioner within 30 working days of its completion.

(1) The Insurance Commissioner may conduct such examination of the Excess Insurance Pool as he deems necessary. The expense of any such examination shall be borne by the Pool.

(m) Within 60 days after the effective date of Section, the Insurance Commissioner shall promulgate rules and regulations to effectuate the purposes of this Section. Such rules and regulations shall include, but not be limited to, establishment, operations, modification and dissolution of the Excess Insurance Pool established pursuant to the provisions of this Section.

(a) No proceeds of any bonds, the Interest on which is excludable from the gross income of the holder thereof, shall be comingled with any other funds in a manner that, in the opinion of nationally recognized Bonds Counsel, could cause the aforesaid interest to be taxable.

Section 407. Powers of the Authority

(a) The Authority may issue bonds not pledging the full faith and credit of the State of Delaware to finance the cost of establishing a capital fund for Joint Insurance Funds. Bonds of the Authority may be tax-exempt or taxable, and may be issued to refund bonds Issued pursuant to this subchapter. Bonds of the Authority may pledge the full
faith and credit of any public entity, as provided in Section 404(o) hereof.

(b) The Authority shall have all of the powers necessary or convenient to carry out and effectuate the purposes and provisions of this subchapter Including without limitation the power:

(1) To adopt bylaws for the regulation of its affairs and the conduct of its business and to adopt rules, regulations and policies In connection with the performance of Its functions and duties;

(2) To adopt, use and alter at will an official seal;

(3) To sue In Its own name;

(4) To acquire In its own name by purchase, )ease or otherwise, on such terms and conditions and In such manner as It may deem proper, any franchise, property, real, personal or mixed, tangible or intangible, or any interest therein, and to sell, tease as lessor, mortgage or otherwise encumber, transfer or dispose of any such property or interest therein;

(6) To enter into contracts with any person upon such terms and conditions as the Authority shall determine to be reasonable, providing, without limitation, for reimbursement for the administration, funding, claims service, investment, or otherwise dealing with any capital fund established out of proceeds of bonds;

(6) To establish and maintain funds of any kind, Including without limitation capital, reserve and Insurance funds;

(7) To mortgage, pledge, assign or otherwise encumber all or any portion of revenues or funds;

(8) To contract for and to accept any gifts, grants or loans of funds or property or financial or other aid from any source, and to comply, subject to this subchapter with the terms and conditions thereof;

(9) To charge and collect such fees and charges as It shall determine to be reasonable for the use of Its services;

(10) To acquire, purchase, manage, operate, hold and dispose of real and personal property or interests therein, take assignments of rentals and leases and make and enter into all contracts, leases, agreements and arrangements necessary or Incidental to the performance of Its duties;

(11) To purchase, acquire and take assignments of notes, mortgages and other forms of security and evidences of indebtedness;

(12) To borrow money and Issue bonds (the Interest on which may be taxable or exempt from tax under the Internal Revenue Code of 1986) as provided in this chapter, and provide for the rights of the holders thereof;

(13) To invest any funds or moneys of the Authority pending the application of such funds or moneys to the purposes specified in this chapter;

(14) To employ actuaries, claims adjusters, claims managers, consulting

engineers, architects, attorneys, (29 Del. C. §2507 notwithstanding), real estate counselors, appraisers and such other consultants and employees, who shall not be members of the classified service, as may be required In the judgment of the Authority to carry out the purposes of this subchapter, and to fix and pay their compensation from funds available to the Authority therefor;

(15) To do and perform any acts and things authorized by this subchapter under, through or by means of Its own officers, agents and employees, or by contracts with any person; and

(16) To procure insurance against any losses in connection with Its property, operations or assets In such amounts and from such Insurers as It deems desirable.

Section 408. Application of Joint Insurance Fund for Admission to Capital Fund of Authority.

(a) Any Joint Insurance Fund and the Excess Insurance Pool may apply for admission to the Capital Fund of the Authority and shall submit an application to the Authority on such forms as the Authority may require.

(b) Such application shall include all documentation, actuarial studies, relevant loss history and any other information required by the Authority pertaining to the applicant Fund or Pool, as well as an agreement to be bound by the provisions of the Authority's bylaws, rules, regulations and policies.

(c) Upon receipt of such application, the Authority may grant the application, grant the application with amendments required by the Authority, or deny the application.

Section 409. Authority Not Treated as Insurer.

18 Del.C. §104 Is amended by adding new subsections (4), (5) and (6) as follows:

(4) The Delaware Insurance Authority"

(1) "Joint Insurance Funds"

(2) The Excess Insurance Pool"

Joint Insurance Funds and the Excess Insurance Pool shall nevertheless be governed by Chapters 9 (Kinds of Insurance), 11 (Assets and Liabilities), 13 Investments), 23 (Unfair Practices) and 59 (Liquidation) of Title 18, Delaware Code. If the Commissioner shall determine that Joint Insurance Funds created hereunder have a significant competitive advantage over private insurers because Joint Insurance Funds are not required to participate In residual insurance markets now in existence or herafter created, the Commissioner shall issue regulations requiring participation by Joint Insurance Funds in such residual markets.

Section 410. Bonds.

(a) The bonds authorized to be Issued by this chapter shall be authorized by a resolution and shall be of such series; bear such date or dates; mature at such time or times; bear Interest at such rate or rates; be in such denominations; be of a single denomination payable In Installments, be in such form, either coupon or fully registered without coupon; carry such registration, exchangeability and Interchangeability
privileges; be payable in such medium of payment and at such place or places; be subject to such terms of redemption; and be entitled to such priorities In the revenues of the Authority as such resolution may provide. The bonds shall bear the manual or facsimile
signature of the Insurance Commissioner and of the State Treasurer, and coupon bonds shall have attached thereto Interest coupons bearing the facsimile signature of the Insurance Commissioner. Any such bonds may be issued and delivered notwithstanding the
fact that one or more of the officials signing such bonds, or whose facsimile signature shall be upon the bonds or coupons, shall have ceased to be such official or officials at the time when such bonds shall actually be delivered.

(b) The bonds may be sold at public or private sale for such price or prices as the authority shall determine. Any bonds may be consolidated for sale with any other bonds of the Authority and sold as a single issue. Pending the preparation of the definitive
bonds, temporary bonds may be issued to the purchaser or purchasers of such bonds and may contain such terms and conditions as the Authority may determine. No bonds may be
Issued without the approval of the Issuing Officers as defined in 29 Del.C. §740i.

(c) No proceeds of bonds the interest on which is excludable from gross income pursuant to the Internal Revenue Code of 1986, as it may be from time to time amended, shall be applied to any Joint Insurance Fund for Private Persons created by Section 405 hereof.

Section 411. Convenants with Bondholders.

(a) The Authority shall have the power to convenant and to agree with the holders of bonds in order to secure the payment of such bonds, as to:

(1) The custody, security, use, expenditure, investment or application of the proceeds of bonds;

(2) The use, regulation, operation, maintenance, insurance or disposition of all or any part of any project;

(3) The payment of principal, premium, if any, and interest on bonds, the sources and methods of payment thereof, the rank or priority of any such bonds as to any lien or security or the acceleration of the maturity of any such bonds;

(4) The use and disposition of any moneys of the Authority, including all revenues;

(5) The mortgage, pledge, assignment or deposit of all or any part of the revenues or other moneys of the Authority to secure the payment of the principal, premium, if any, and interest on bonds, and the powers and duties of any trustee or agent with regard thereto;

(6) The segregation of revenues or other moneys of the Authority into reserves and sinking funds, and the source, custody, investment, security, regulation, application and disposition thereof;

(1) Any limitation on the issuance of additional bonds or on the incurrence of indebtedness of the Authority;

(1) Any vesting In a trustee or trustees, fiscal or escrow agent or agents, within or without the State, or such property, rights, powers and duties as the Authority may determine, and any limitation on the rights, duties and powers of such trustee or agent;

(1) The payment of costs or expenses incident to the enforcement of the bonds, the resolution or any convenant or contract with the holders of bonds;

(TO) The procedure, if any, by which the terms of any convenant or contract with, or duty to, the holders of bonds may be amended or abrogated, the amount of bonds, the holders of which must consent thereto, and the manner In which such consent may be given or evidenced; or

(II) Any other matter or course of conduct which, by recital In a resolution, is declared to secure further the payment of the principal, premium, if any, or interest on bonds.

(b) All such provisions of a resolution and all such convenents and agreements shall constitute valid and legally binding contracts between the Authority and the several holders of bonds to which they relate, regardless of the time of issuance of such bonds.

Section 412. Pledge of Revenues or Other Property.

Any pledge of revenues or other property made by the Authority shall he valid and binding from the time when the pledge is made. Revenues so pledged and thereafter received by the Authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act. The lien of any such pledge of revenues or other property shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Authority, whether or not such parties have notice thereof. Neither the resolution or any other instrument by which a pledge is created need be filed or recorded; however, copies of such resolution or instrument shall be retained by the Authority.

Section 413. Limitation on Liability. of State.

(a) Bonds issued pursuant to this chapter shall not constitute a debt of the State or a pledge of the full faith and credit or taxing power of the State, and shall not obligate the State to make any appropriation for their payment.

(b) All bonds shall contain on the face thereof a statement to the following effect:

"Neither the faith and credit nor the taxing power of the State is pledged to the payment of the principal of, premium, if any, or interest on this bond, nor is the State or the Delaware Insurance Authority in any manner obligated to make any appropriation for payment thereof."

Section 414. Negotiability of Bonds.

The bonds and any coupons appurtenant thereto shall be negotiable instruments and securities under the Uniform Commercial Code of the State.

Section 415. Limitation of Powers of State.

The State pledges to and agrees with any holder of the bonds that the State will not limit or alter the rights vested in the Authority until all bonds at any time issued, together with the interest thereon and all costs and expenses in connection with any action or proceeding by, or on behalf of the bondholder are fully met and discharged; provided, however, that nothing herein contained shall preclude such limitation or alteration, if, and when, adequate provision shall have been made by law for the protection from impairment of the contracts represented by such bonds. By enacting this Act, the General Assembly contemplates that activities by public entities, school districts and the Authority pursuant to this Act shall not be subject to the antitrust laws of the United States.

Section 416. Bonds as Legal Investments for Institutions and Fiduciaries.

Bonds issued under this subchapter are made securities in which all state and municipal officers and administrative departments, boards and commissions of the State, all banks, bankers, savings banks or societies, trust companies, building and loan associations, savings and loan associations, Investment companies and other persons carrying on a banking business, all insurance companies, Insurance associations and other persons carrying on an insurance business, and all administrators, executors, guardians, trustees and other fiduciaries and all other persons whatsoever authorized to invest in bonds or other obligations of the State, may properly and legally Invest any funds, including capital belonging to them or within their control.

Section 417. Property of Authority Exempt from Judicial Process.

All property of the Authority shall be exempt from execution process, and no attachment, sequestration, execution, levy or other judicial process shall issue against the same, nor shall any judgment against the Authority be a charge or lien upon Its property; provided, however, that nothing herein contained shall apply to or limit the rights of the holder of any bonds to pursue any remedy for the enforcement of any pledge or lien given by the Authority on or with respect to any project or any revenues or other moneys.

Section 418. Immunity_from Suit.

All persons acting on behalf of the governmental entities created pursuant to this chapter, including but not limited to the members of the Delaware Insurance Authority, the boards of directors of the Joint Insurance Funds and the Pool governors, acting in any official capacity, whether temporarily or permanently, and whether with or without compensation, including elected or appointed officials, shall not be liable for any damage claim which results from the performance or failure to exercise or perform any function or duty, whether or not discretion be abused and whether or not the statute, charter, ordinance, order, resolution, or regulation under which the function or duty is performed is valid or invalid.

Section 419. Premium Tax,

All payments made to any Joint Insurance Fund created hereunder which would have been taxed as premium pursuant to 18 Del.C. §§702 through 712, inclusive, if paid through a private Insurer, shall be taxed as if the payment to the Joint Insurance Fund were a premium.

Section 420. Liberal Construction of Chapter.

This chapter, being necessary for the prosperity and welfare of the State and its citizens, shall be liberally construed to effect the purposes of this chapter.

Section 421. Inconsistent Laws Inapplicable.

Insofar as any provision of this chapter is inconsistent with any general, special or local laws, or part thereof, this chapter shall be controlling.

Section 422. Severability.

If any section, part, phrase or provision of this Act or the ampilcatlon thereof be held invalid by any court of competent jurisdiction, such judgment shall be confined in Its operation to that section, part, phrase, provision or application directly Involved in the controversy in which such judgment shall have been rendered and shall not affect or impair the validity of the remainder of this Act or the application thereof.

Section 423. Immediate Effective date.

This Act shall become effective immediately.

Approved July 15, 1988.