a. The bylaws of any school board insurance group shall:

(1) Set forth a statement of purposes of the group;

(2) Set forth provisions for organization of the group, including governance by a board of trustees;

(3) Provide for the delivery of a risk management program in conjunction with any joint self-insurance fund or funds which the board of trustees shall establish. The risk management program shall include, but not be limited to:

(a) the perils of liabilities to be insured against;

(b) limits of coverage, whether self-insurance, direct insurance purchased from a commercial carrier or reinsurance;

(c) the amount of risk to be retained by the fund;

(d) the amount of reserves to be established;

(e) the proposed method of assessing contributions to be paid by each member of the fund;

(f) procedures governing loss adjustment and legal fees;

(g) coverage to be purchased from a commercial insurer, if any;

(h) reinsurance to be purchased, if any, and the amount of premium therefor; and

(i) such other procedures and information as the commissioner may require by rule or regulation;

(4) Set forth procedures to enforce the collection of any contributions or payments in default;

(5) Set forth membership standards as required in section 3 of P.L.1983, c.108 (C. 18A:18B-3);

(6) Require that, for each joint self-insurance fund, a contract or contracts of specific and aggregate excess insurance or reinsurance is maintained;

(7) Set forth procedures for:

(a) Withdrawal from the group and a fund by a member;

(b) Termination of the group or fund and disposition of assets; and

(c) Determining the obligations, if any, of a member in the event that the group is unable to pay indemnification obligations and expenses payable from a fund administered by it;

(8) Require an annual certified audit to be prepared and filed with the commissioner;

(9) Require that any joint self-insurance fund or funds be developed and operated in accordance with accepted and sound actuarial practices;

(10) Provide that any expenditure of moneys in a fund be in furtherance of the purpose of the fund;

(11) Set forth other provisions as desired for operation and governance of the group;

(12) Provide for expulsion of a member; and

(13) Comply with any requirement established by the commissioner by rule or regulation.

b. The bylaws of a group shall provide for governance of the group by a board of trustees selected in accordance with the provisions of the bylaws. The bylaws shall provide for trustee powers and duties and shall include, but not be limited to, the following powers of the board of trustees:

(1) To determine and establish contributions and rates, loss reserves, surplus, limits of coverage, limits of excess or reinsurance, coverage documents, dividends and other financial and operating policies of the group or fund;

(2) To invest moneys held in trust under any fund in investments which are approved for investment by regulation of the State Investment Council for surplus moneys of the State or, at the discretion of the board, to transfer moneys held in trust under any fund to the Director of the Division of Investment in the Department of the Treasury for investment on behalf of the board in accordance with the standards governing the investment of other funds which are managed under the rules and regulations of the State Investment Council. However, any moneys transferred to the director for investment may not thereafter be withdrawn except upon withdrawal of a member from the group or a fund or termination of the group or a fund or in specific amounts in payment of specific claims, administrative expenses or member dividends upon affidavit of the director or other chief executive officer of the group. In addition to the types of securities in which the joint insurance fund may otherwise invest, a joint insurance fund may invest moneys held in trust under any fund in bonds, notes, and other obligations issued by an agency or corporation of the federal government or a governmental entity established under the laws of this State, provided that the agency, corporation, or governmental entity responsible for the issuance of the bonds, notes, or other obligations is not in default as to the payment of principal or interest upon any of its outstanding obligations, and provided further that the bonds, notes, or other obligations are purchased at fair market value, guaranteed as to interest and principal, and have a credit rating of A3 or higher by Moody’s Investor Services, Inc., A- or higher by Standard & Poor’s Corporation, and A- or higher by Fitch Ratings, except that two of the three ratings is sufficient and further provided that the Commissioner of the Department of Community Affairs, in consultation with the Commissioner of the Department of Banking and Insurance, shall promulgate rules and regulations to limit the duration of the long-term investments and to cap these investments at an appropriate percentage of a joint insurance fund’s overall investment portfolio. If a rating for the bonds, notes, or other obligations has not been obtained from two of the credit rating agencies, the bonds, notes, or other obligations may be purchased if the agency, corporation, or governmental entity responsible for the issuance meets the minimum rating criteria specified by the previous sentence and if the bond offering has the unconditional guarantee of the agency, corporation, or governmental entity responsible for the issuance;

(3) To purchase, acquire, hold, lease, sell and convey real and personal property, all of which property shall be exempt from taxation under chapter 4 of Title 54, Taxation, of the Revised Statutes;

(4) To collect and disburse all money due to or payable by the group, or authorize such collection and disbursement;

(5) To enter into contracts with other persons or with public bodies of this State for any professional, administrative or other services as may be necessary to carry out the purposes of the group or any fund;

(6) To purchase and serve as the master policyholders if desired, for any insurance, including excess or reinsurance;

(7) To prepare, or cause to be prepared, a risk management program for the joint insurance group;

(8) As the need arises, from time to time, to amend the bylaws or risk management program of the fund; except that no such amendment shall take effect until approved in the following manner:

(a) The trustees shall file with the commissioner, for his approval: a copy of any amendment to the bylaws of the fund, upon approval by resolution of three-fourths of the member school boards or in such other manner as established by the fund and approved by the commissioner; or any amendment to the risk management program, upon adoption by the trustees.

(b) Within 60 days of receipt, the commissioner shall either approve or disapprove any amendment to the bylaws or risk management program. If the commissioner fails to either approve or disapprove the amendment within that 60-day period, the amendment shall be deemed approved;

(c) If any amendment is disapproved, the commissioner shall set forth, in writing, the reasons for disapproval. Upon the receipt of the notice of disapproval, the trustee of the affected joint insurance fund may request a public hearing. The public hearing shall be convened by the commissioner in a timely manner;

(d) Within 90 days after the effective date of any amendment to the bylaws, a member school board which did not approve the amendment may withdraw from the fund, except that it shall remain liable for its share of any claim or expense incurred by the fund during its period of membership;

(9) To do all other things necessary and proper to carry out the purposes for which the group is established.

L.1983, c.108, s.3; amended 1992, c.53, s.1; 1995, c.74, s.2; 2018, c.40, s.3.