(a) Definitions. For the purpose of this section, the following terms shall have the meanings subscribed to them by this section:

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Terms Used In Alabama Code 16-8-42.1

  • following: means next after. See Alabama Code 1-1-1
  • Fraud: Intentional deception resulting in injury to another.
  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
  • Tort: A civil wrong or breach of a duty to another person, as outlined by law. A very common tort is negligent operation of a motor vehicle that results in property damage and personal injury in an automobile accident.
(1) RISK MANAGEMENT COOPERATIVE. An entity or entities, to be formed by local boards of education in any combination of 25 or more for the purpose of pooling resources and funds to jointly purchase insurance or to self-insure such boards of education, their members and employees, against risks to which they are exposed.
(2) MEMBER BOARDS OF EDUCATION. A city board of education, county board of education, Department of Youth Services School District, Alabama Institute for Deaf and Blind, State Board of Education or other public education governing board which elects to pool its resources and funds with one or more other boards of education for the purpose of forming a risk management cooperative.
(b) Boards of education in any combination of 25 or more may establish a risk management cooperative for the purpose of pooling resources and funds to provide risk management alternatives for each member board of education and other named insureds. Member boards of education may appropriate such funds as necessary to the risk management cooperative created hereunder.
(c) Each risk management cooperative established under provisions of this section shall have the power and authority to establish a governing body of trustees; establish bylaws for the governing of such group; enter into contracts with member boards of education; establish a schedule of benefits payable; establish a schedule of charges to be collected from member boards of education for benefits provided; enter into contracts with solvent insurers to provide excess coverage; enter into management and consultant contracts; hire attorneys and employees; and, exercise such powers and authority incident to the purposes of this section.
(d) Each risk management cooperative established under the provisions of this section shall file with the State Insurance Commissioner a copy of its bylaws and schedule of benefits and charges. Each risk management cooperative shall also annually file with the State Insurance Commissioner a certified financial audit.
(e) Any insurance and/or excess insurance purchased by each risk management cooperative established under the provisions of this section shall only be procured from sources meeting the requirements of the Department of Insurance of Alabama and/or federal Risk Retention Amendments of 1986. Copies of insurance contracts, if any, purchased by each risk management cooperative will be filed annually with the State Insurance Commissioner.
(f) Each risk management cooperative established under the provisions of this section shall specifically be exempt from the payment of any insurance premium tax levied by the Insurance Department on premiums or charges collected.
(g) This section is not intended and shall not be construed to subject any board of education to liability for tort claims where liability therefor does not already exist by law.
(h) No risk management cooperative nor the trustees, employees or agents thereof, shall be subject to suit by any third party on account of claim against a member board of education. It shall incur no liability to any party other than that authorized and contracted for under provisions of this section. Provided, however, that this section shall not prohibit an action for fraud brought directly against said risk management cooperative or its agents.
(i) No risk management cooperative established under the provisions of this section shall provide coverage or benefits as authorized under the Public Education Employees’ Health Insurance Plan or the State Insurance Fund.
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