BILL NUMBER: SB 1011	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 26, 2014
	AMENDED IN SENATE  APRIL 22, 2014

INTRODUCED BY   Senator Monning

                        FEBRUARY 13, 2014

   An act to amend Section 5005.1 of the Corporations Code, relating
to corporations.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1011, as amended, Monning. Nonprofit corporations:
self-insurance.
   The Nonprofit Corporation Law authorizes certain nonprofit
corporations that are organized chiefly to provide  or fund 
health or human services, other than hospitals, to establish an
insurance pool to self-insure against various risks, including, among
others, tort liability and any loss arising from physical damage to
motor vehicles owned or operated by the nonprofit corporation. The
pooling arrangement is not considered insurance nor is it subject to
regulation under the insurance laws of this state.
   This bill would extend these provisions to authorize the
establishment of an insurance pool to self-insure against the loss or
damage to property of every kind, including, but not limited to,
losses and expenses related to the loss of property.  The bill
would require that the pooling arrangement be organized as a
nonprofit public benefit corporation.  The bill would require
that all corporations participating in a pooling arrangement
established under these provisions be given written notice  by
the pooling arrangement corporation  that the pool is not
regulated by the Insurance Commissioner and that the state insurance
insolvency guaranty funds are not available to safeguard its risk.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 5005.1 of the Corporations Code is amended to
read:
   5005.1.  (a) Except for a liability that may be insured against
pursuant to Division 4 (commencing with Section 3200) of the Labor
Code, an authorized corporation may do any of the following:
   (1) Insure itself against all or any part of any tort liability.
   (2) Insure any employee of the corporation against all or any part
of his or her liability for injury resulting from an act or omission
in the scope of employment.
   (3) Insure any board member, officer, or volunteer of the
corporation against any liability that may arise from any act or
omission in the scope of participation with the corporation.
   (4) Insure itself against any loss arising from physical damage to
motor vehicles owned or operated by the corporation.
   (5) Insure itself against the loss or damage to property of every
kind, including, but not limited to, losses and expenses related to
the loss of property.
   (b) (1) The insurance authorized pursuant to this section shall
only be available to an authorized corporation where that corporation
has joined with two or more other authorized corporations in an
arrangement providing for the pooling of self-insured claims or
losses. The pooling arrangement  shall be organized as  
a nonprofit public benefit corporation pursuant to Part 2
(commencing with Section 5110)   and  shall not be
considered insurance nor be subject to regulation under the Insurance
Code.
   (2) All corporations participating in a pooling arrangement
established pursuant to this section shall be given written notice
 by the pooling arrangement corporation  that the pool is
not regulated by the Insurance Commissioner and that the state
insurance insolvency guaranty funds are not available to safeguard
its risk.
   (c) This section does not authorize a corporation organized
pursuant to this division to pay for, or to insure, contract, or
provide for payment for, any part of a claim or judgment against an
employee of the corporation for punitive or exemplary damages.
   (d) Any insurance pool established pursuant to this section shall
have initial pooled resources of not less than two hundred fifty
thousand dollars ($250,000).
   (e) All participating corporations in any pool established
pursuant to this section are required to agree to pay premiums or
make other mandatory financial contributions or commitments necessary
to ensure a financially sound risk pool.
   (f) For the purpose of this section, an authorized "corporation"
means any corporation that meets all of the following criteria:
   (1) Is organized chiefly to provide or fund health or human
services, but does not include a hospital.
   (2) Is exempt from federal income taxation as an organization
described in Section 501(c)(3) of the United States Internal Revenue
Code.