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OPERATIONAL RULES

 

OPERATIONAL RULES

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Adopted as of March 30, 1995

TABLE OF CONTENTS

                                                                                                                                                    

SECTION I - Interlocal Agreement 2

6.         Board of Directors. 2

7.         Board Meetings. 3

7.2     Notice of Special Meetings. 3

7.3     Notice of Emergency Meetings. 3

7.4     Establishment of Board Meeting Agenda. 3

7.7     Pre-Vote Analysis. 4

8.         Fund Officers. 4

8.2     Succession and Vacancies. 4

9.         Committees. 5

10.       Fund Administration. 10

11.       Fund Records and Board and Committee Meeting Minutes. 11

11.1       Official Fund Records. 11

11.2       Custodian and Right to Inspect Records. 12

11.3       Approval of Board, Executive and Operations Committee Minutes. 12

11.4       Distribution of Administrative Committee Minutes. 12

12.       Fund Auditor, Fund Accounting and Financial Reporting Requirements. 12

12.2       Fund's Investment Related Bookkeeping Procedures. 12

12.4       Fund Disbursement Procedures When the Administrator Physically Makes the Disbursements. 12

12.5       Accounting Guidelines, Financial Statements and Fiscal Year 12

12.6       Fund's Monthly Receipts and Expenditures Analyses. 13

12.7       Financial Reporting Requirements. 13

16.       Subgroups and the Purchase of Additional Excess or Different Excess Insurance. 13

17.       Risk Management Procedures.  [Reserved] 18

18.       New Members. 18

18.1       New Member Admission Requirements. 18

19.       Appeal Procedures and Administrative Committee's Primary Jurisdiction. 18

30.       Supplemental General Provisions.  [Reserved] 20

SECTION II - Definitions. 20

30.       Supplemental General Provisions.  [Reserved] 20

SECTION III – Commercial General Liability Coverage. 20

2.         Insuring Agreement and Conditions for CGL Coverage. 20

2.2     Coverage Limit 21

2.3     Deductible. 21

2.5     Pre-Approval Procedures. 21

2.7     Other Insurance and Third Party Indemnifications. 27

3.         Exclusions for CGL Coverage. 27

3.9     Procedures for Determining a Member's Good Faith and Reasonable Belief that the Action Giving Rise to the Claim was Lawful. 27

3.15       Requirements for Indemnification and Hold Harmless Agreement Re: "Loaned Equipment 28

3.16       Procedures for Determining and Pre-Approving Coverage for "Extraordinary Activities" of Members. 28

30.       Supplemental General Provisions.  [Reserved] 29

SECTION IV – Public Officials & Entity Coverage. 29

30.       Supplemental General Provisions.  [Reserved] 29

SECTION V - Auto Liability Coverage. 29

30.       Supplemental General Provisions.  [Reserved] 29

SECTION VI - Pollution Liability Coverage. 29

2.         Insuring Agreement and Conditions for Pollution Coverage. 29

3.         Exclusions for Pollution Coverage. 29

30.       Supplemental General Provisions.  [Reserved] 30

SECTION VII - Claims Resolution Rules & Procedures. 30

1.         Members' Duties. 30

6.         Settlements. 31

6.3     Member Settlement Ceiling. 31

7.         Payment of Coverage. 31

7.1     Fund Reimbursement of the Costs Incurred by a Member to Repair or Replace Damaged Property. 31

30.       Supplemental General Provisions.  [Reserved] 32

SECTION VIII – Liability Pool General Assessment Formula. 32

30.       Supplemental General Provisions.  [Reserved] 32

SECTION IX - Premium Assessment Formula. 32

30.       Supplemental General Provisions.  [Reserved] 32

SECTION X – General Property Coverage. 32

30.       Supplemental General Provisions.  [Reserved] 32

SECTION XI – Auto Physical Damage Coverage. 32

30.       Supplemental General Provisions.  [Reserved] 32

SECTION XII – Property Pool General Assessment Formula. 32

30.       Supplemental General Provisions.  [Reserved] 32

SECTION XIII – Property Pool Premium Assessment Formula. 32

30.       Supplemental General Provisions.  [Reserved] 32

SECTION XIV – Health & Welfare Coverage. 32

30.       Supplemental General Provisions.  [Reserved] 32

SECTION XV - Health & Welfare Pool General Assessment Formula. 32

30.       Supplemental General Provisions.  [Reserved] 32

 


OPERATIONAL RULES

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Amended and Restated as of March 30, 1995

These Operational Rules supplement the PURMS Self-Insurance Agreement, providing procedures and greater detail for the authority and operations of the Fund under the SIA.  These Operational Rules were adopted specifically in § I, ¶ 5.6, of the Interlocal Agreement section of the SIA, amended and restated as of March 30, 1995, and are subject to amendment in accordance with § I, ¶ 5.2.2(b) of the SIA.  The Definitions in § II of the SIA apply to these Operational Rules.


SECTION I - Interlocal Agreement

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6.         Board of Directors.

6.1.1    Designation of Director.  Prior to January 15 of each new calendar year, each Member shall in writing, notify the Administrator of the identity of its Designated Director, its First and Second Alternate Directors, and of any Employee Designees, as referred to in the Interlocal Agreement, § I, ¶ 6.1.2.  If a Director is absent from a Board meeting for any reason, the Member's First Alternate Director may act as that Member's Director, and if both the Director and First Alternate Director are absent, then the Second Alternate Director may act as that Member's Director.  A Member may from time to time designate a different person to serve as its Director, or as its First or Second Alternate Director, by causing written notice thereof to be delivered to the Administrator and the President at or before the commencement of a Board meeting.

6.1.2(A)   Employee Designees.  Each Member's list of Employee Designees shall identify such Employees in numerical order and that order shall govern the priority of each such Employee's right to vote vis-a-vis the other Employees listed, e.g., the Employee listed first shall have the right to vote at the meeting over the Employee listed second if both are in attendance.  In the event a Designated Director or Alternate Director and an Employee Designee appear at the same meeting, except as otherwise provided for in ¶ 6.1.2(B), only the vote of the Director or Alternate Director shall be recognized.

6.1.2(B)   Employee Designation for a Specified Board Meeting.  Any Director of a Member may, from time to time, designate a particular Employee to serve as that Member's Director for a specified Board meeting so long as the Director provides the Administrator with written authorization establishing the identity of the Employee Designee before or at the commencement of the specified Board meeting.  The authorization of such Employee Designee to vote on behalf of the Member shall expire upon conclusion of the specified meeting.  In the event a Director or Alternate Director and an Employee Designee under this ¶ 6.1.2(B) appear together at the specified Board meeting, only the vote of the Director or Alternate Director shall be recognized, unless the written authorization establishing the Employee Designee under this ¶ 6.1.2(B) has been signed by a majority of the Member's Board, in which event, only the vote of the Employee Designee shall be recognized.

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7.         Board Meetings.

7.1.1    Time, Place and Notice of Board Meetings.  The Administrator, after conferring with the Fund Officers and the Administrative Committee, shall establish the two General Meeting dates for the Board on or before January 15 of each new calendar year and inform each Director thereof in writing.  The Administrator, in addition, shall send each Director a written Notice of Meeting setting forth the date and location of each General Meeting at least thirty (30) days in advance thereof.  The Administrator also shall provide such Notice of Meeting to those persons, including the media, who request such Notice.

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7.2       Notice of Special Meetings.  The Administrator shall mail each Director written Notice of the Special Meeting at least fourteen (14) days prior to the date set therefore.  The Notice shall also be delivered personally or by mail at least twenty-four (24) hours before the time of the Special Meeting specified in the Notice to each local newspaper of general circulation and to each local radio or television station that have on file with the Administrator a written request to be notified of such meetings.

7.3       Notice of Emergency Meetings.  The Administrator shall provide each Director with either oral or written Notice of such Meeting at least two (2) days prior to the date thereof.  The Notice shall state the time, place, and purpose(s) of the Emergency Meeting.  Written Notice of such Emergency Meeting shall also be delivered personally or by mail to each local newspaper and to each local radio or television station on file at least twenty-four (24) hours before the time of such Meeting.   The provision for notice to the media in the immediately preceding sentence may be dispensed with only in the event an Emergency Meeting is called to deal with an emergency involving injury or damage to persons or property or the likelihood of such injury or damage, when time requirements of such notice would make notice impractical and increase the likelihood of such an injury or damage. 

7.4       Establishment of Board Meeting Agenda.  At least ten (10) days prior to the date of each of the Board's General Meetings, and as provided in the Interlocal Agreement, § I, ¶ 7.2 with respect to a Special Meeting, the Administrator shall send all Directors an Agenda identifying the issues to be discussed and/or decided by the Board.  In order for issues to appear on the Agenda of the General or Special Meeting, written requests to include such issues must be received by the Administrator at least fourteen (14) days prior to the date set for the Meeting.  Furthermore, all written requests to include Decision Issues on the Agenda to be voted on by the Board must be delivered to the Administrator at least thirty (30) days prior to the date set for the Meeting.  The Agenda shall designate which issues are Discussion Issues only and which are Decision Issues, specifying those Decision Issues that require approval by a Voting Standard more stringent than a Majority Vote.  The Agenda also shall summarize any reasons submitted in support of any issue raised in a written request, and shall include copies of any documents or position statements submitted by Members in connection with the request along with the written results from any Pre-Vote Analysis performed pursuant to Interlocal Agreement, § I, ¶ 7.7 and Op. Rules, § I, ¶ 7.7.

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7.7       Pre-Vote Analysis.  The Administrator shall notify the Fund Officers and the Administrative Committee of all issues submitted to the Administrator by Members at least thirty (30) days prior to a General or Special Meeting which, pursuant to Interlocal Agreement, § I, ¶ 7.4, are to be included on the Agenda as Decisions Issues for the Board.  If, in the opinion of the Administrator, a majority of the Fund Officers, or the Administrative Committee, an issue submitted needs further investigation or analysis before a Board Vote to enable the Board to make a more informed decision, or if the Administrative Committee desires to make a specific recommendation to the Board on the issue or to discuss the issue with the Executive Committee for the same purpose, then the Administrative Committee shall attempt to meet and conduct a Pre-Vote Analysis of the issue.  The Administrative Committee's Pre-Vote Analysis may include, at the Administrative Committee's discretion, a meeting with a representative of the Member or the Employee that raised the issue and/or with the Executive Committee.  The written results of the Committee's Pre-Vote Analysis, if any, shall be delivered to each Designated Director prior to or at the commencement of the Board's next General or Special Meeting.  In its discretion, the Administrative Committee may recommend that the Board defer a vote on the issue or certain aspects of the issue until some stated future time to permit such further investigation and analysis as the Board shall direct.

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8.         Fund Officers.

8.2       Succession and Vacancies.  The Fund Officers shall hold office for a period of one year commencing on January 1 and until their successor or successors are elected and assume office on January 1 of the following year.  At the end of each calendar year, the President shall retire, the Vice-President shall become the President, and the Secretary-Treasurer shall become the Vice-President, unless the Board alters this order of succession by Majority Vote.  The Secretary-Treasurer shall be nominated from the floor. In the event a Fund Officer becomes ineligible, resigns, becomes disabled or otherwise becomes incapable of performing his or her duties for the Fund, if the vacant office is that of the President or Vice-President, it shall be filled by the person who would automatically succeed to the vacant position the following calendar year, the remaining Fund Officers will advance to the next Fund Officer position in the succession and the Board shall elect a new Secretary-Treasurer as soon as practical.  If the vacant office is that of the Secretary-Treasurer, the Board shall as soon as practicable elect an eligible person to serve as such Officer.  The remainder of the calendar year term for all Fund Officers who succeeded or were elected to new positions upon the filling of a vacancy mid-term shall be in addition to the year-long term such Officers would have had and shall still serve in their successor positions in the year following the vacancy. 

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9.         Committees.

9.2.2    Executive Committee Meetings.  The Executive Committee shall meet at least twice annually to discuss or decide issues properly addressed to the Executive Committee, to discuss topics of current concern to the Fund, and to approve the Monthly Receipts and Expenditures Analyses.  Such meetings may occur in conjunction with the Board's two semi-annual General Meetings; provided, however, that the Executive Committee shall meet at such other times as are necessary to timely decide Appeals or to discharge other duties of the Executive Committee.

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9.3.1    Duties of Members of the Operations Committee.  Each Operations Committee member shall be responsible as the primary liaison between the Fund and its Members, and shall periodically review the issues affecting the Fund and its activities with the Member's management or governing body.  In addition, the duties and authority of the members of the Operations Committee shall be to:

(a)       Coordinate the distribution of information from the Fund and requests by the Fund for information from the Member;

(b)       Ensure that the Member's annual designation of its Directors and Employee Designees to the Board is timely submitted to the Administrator;

(c)       Serve as the custodian of the Member's Program Documents and other information relating to the Fund;

(d)       Ensure implementation within the Member's organization of any confidentiality procedures adopted by the Fund;

(e)       Encourage Members to review their proposed contracts with Third Parties for risk-shifting and insurance requirements issues and to timely submit to the Administrator such contracts that need Pre-Approval as a condition precedent to Coverage by the Fund (see, CGL Coverage, § III, ¶ 2.5).

(f)        Attend such regular and special meetings of the Operations Committee as may be convened by the Administrator or the Administrative Committee; and

(g)       Perform such other duties and have such other authority as may be designated from time to time by the Board by Majority Vote.

9.3.2    Duties of Operations Committee.  The duties and authority of the Operations Committee shall include:

(a)       Making recommendations to the Board regarding appointments or reappointments to the Administrative Committee and forwarding such recommendations to the Administrator at least thirty (30) days prior to the date of any Board meeting at which the Board is to appoint or reappoint persons to serve on the Administrative Committee.

(b)       Providing such assistance to the Administrative Committee as the Administrative Committee may from time to time request;

(c)       Making such written recommendations as it deems advisable to the Administrative Committee regarding any aspect of the Fund's operations; and

(d)       Making such recommendations to the Board with respect to the Fund's operations or actions of the Administrative Committee as the Board may request or as the Operations Committee may deem advisable.

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9.4.3    Duties and Authority of the Administrative Committee.  The duties and authority of the Adminis­trative Committee shall include:

(a)       Assisting the Board in the general operation of the Fund, including advising the Board on all subjects requested by the Board;

(b)       Consulting with the Administrator in connection with establishing the Agenda for all Board, Executive and Operations Committee meetings, setting the dates for General Meetings and calling such Special or Emergency Meetings of the Board as deemed appropriate or necessary.

(c)       Providing the Operations Committee with copies of all written reports or recommendations made to the Board and advising the Operations Committee on all subjects requested.

(d)       Determining whether a Claim is a Covered Claim under the SIA, and ensuring adequate and timely response to Members regarding the Coverage Determination therefore;

(e)       Supervising and providing guidance to the Administrator, and deciding any issues regarding potential or pending Covered Claims, and in particular Covered Liability Claims asserted against Members or Employees or defending suits against Members or Employees involving such Claims, including but not limited to, choice of Defense Counsel and terms of settlement; subject, however, to the Board's power by Majority Vote to transfer such authority with respect to a particular Claim or lawsuit to the jurisdiction of the Executive Committee or the Board (see, Interlocal Agreement, § I, ¶¶ 6.2.12, 9.2.1(c), and 6.2.11).

(f)        Supervising and providing guidance to the Administrator and General Counsel, and deciding any issues regarding any Coverage Litigation or any other lawsuit in which the System or the Fund is a party, and periodically reporting to the Fund Officers regarding same; subject, however, to the Board's power by Majority Vote to transfer such authority to the jurisdiction of the Executive Committee or the Board (see, Interlocal Agreement, § I, ¶¶ 6.2.12, 9.2(b) and 6.2.11).

(g)       On its own initiative, or at the request of the Board, any Fund Officer, the Operations Committee, or any Member, providing for the preparation of interpretations, including legal opinions, regarding the SIA, or the Operational Rules, or general advisory opinions on Coverage under the SIA based on hypothetical facts specified by a Member.

(h)       Reviewing and, on a case-by-case basis, approving or denying Members' applications to the Fund for Pre-Approval for the types of risks specified in CGL Coverage, § III, ¶ 2.5, or required in any other provisions of the SIA or Operational Rules.

(i)        Directing generally the Administrator, the Broker and General Counsel in their work for the Fund, negotiating annually the terms of their contracts with the Fund and presenting such contracts to the Board for approval, evaluating their performance at year-end, reporting the results of such evaluations to the Board, and making recommendations to the Board regarding renewal of such contracts or identifying alternative sources from which the Fund should obtain such services.

(j)        Establishing eligibility criteria and procedures for and negotiating and entering into all contracts on behalf of the Fund with all other third-parties, including but not limited to, independent qualified claims review professionals and actuaries qualified under State law (see, WAC 284.05.060), and designating the Administrator or one or more members of the Administrative Committee to execute such contracts on behalf of the Fund; provided, however, the Administrative Committee shall not have authority to enter into such contracts on behalf of and binding upon the Fund in excess of $25,000 without the Board's approval.

(k)       Providing guidance to the Broker, with the help of the Administrator, regarding the acquisition of Excess Coverage, including periodically providing for analyses of the Fund's Excess Coverage needs, comparing available coverages and making recommendations to the Board regarding renewals, endorsements, terminations and alternative coverages.

(l)        Supervising and deciding any issues relating to the process of forming Subgroups and the acquisition of Subgroup Policies, except for issues reserved for decision by Subgroup Members under Op. Rules, § I, ¶ 16.

(m)      Supervising and deciding any issues relating to the Fund's relationships with the various agencies of the State of Washington that have jurisdiction over the Fund, including without limitation, the Division of Risk Management and the State Auditor's Office, and ensuring, to the extent reasonably possible, the Fund's compliance with the requirements of such State Regulatory Agencies, including the timely submission of all required reports.

(n)       Working with the Fund Auditor in supervising generally the preparation of the Fund's Monthly Receipts and Expenditures Analysis and obtaining the Executive Committee's approval of the same, periodically analyzing the Fund's financial condition and needs, overseeing the preparation of the Fund's financial statements in accordance with applicable law and generally accepted accounting principles, and reporting to the Board regarding same.

(o)       Advising the Board of the necessity of making Discretionary General Assessments or any Special Purpose Assessments and the appropriate amounts thereof.

(p)       Maintaining a general awareness regarding Members' and Former Members' payments of Assessments levied by the Fund and, where appropriate, making recommendations to the Board regarding

(q)       Periodically reviewing the need for amendments to the SIA or the Operational Rules and making recommendations regarding same to the Board.

(r)        Providing for the preparation of minutes of Board meetings and the Executive, Operations and Administrative Committee meetings and the distribution of those minutes to Members as provided in Interlocal Agreement, § I, ¶¶ 11.3 and 11.4, and Op. Rules, § I, ¶¶ 11.3 and 11.4.

(s)        Remaining vigilant for, and where appropriate in the Administrative Committee's judgment, actively seeking opportunities to market the Fund to other Local Governmental Entities to increase the number of Fund Members and further spread the Members' Risks.

(t)        Providing for the analysis of the operations and Risks posed by any Local Governmental Entity applying for admission to any of the Fund’s Risk Pools, and recommending to the Board whether such application should be accepted, and if so, upon what special terms, if any.

(u)       As set forth in Interlocal Agreement, § I, ¶ 17, providing for and supervising the implementation and enforcement of a written Risk Management Program for the Fund, including but not limited to:

(1)       Preparing and periodically updating the Fund's Claims Manual and its Risk Management Program.

(2)       Providing for seminars and loss control programs for Members on subjects relevant to reducing Members' and/or the Fund's exposure to losses from Covered Claims.

(3)       Preparing, with the advice of the Operations Committee, and recommending to the Board a program of written Loss Control Guidelines, which shall become part of the Fund's written Risk Management Program, on such subjects as the Administrative Committee from time to time deems appropriate.

(4)       Providing for the periodic inspection and evaluation of Members' operations and compliance with applicable State and Federal laws and the Fund's Loss Control Guidelines, supervising the Administrator's actions to obtain remediation of any problems or correction of any non-compliances discovered, and making recommendations to the Executive Committee and the Board regarding any Board Remedies to be imposed for any Member's failure to resolve an Unreasonable Risk by the Compliance Date established by the Executive Committee.

(5)       Negotiating and entering into contracts on behalf of the Fund with such independent contractors as the Administrative Committee deems appropriate to implement the Fund's Risk Management Program; provided, however, that the Administrative Committee shall not have authority to enter into such contracts on behalf of and binding upon the Fund in excess of $25,000 without the Board's approval.

(6)       Determining the appropriateness and approving expenditures of such monies as may be allocated by the Board to the Fund's Risk Management Program.

(v)       Engaging in any Pre-Vote Analysis needed pursuant to Op. Rules, § I, ¶ 7.7.

(w)      Generally, receiving, analyzing and deciding all issues raised or submitted by Members which fall within the Administrative Committee's Primary Jurisdiction as provided in ¶ 19.1 of § I, Interlocal Agreement, and in the event the Committee's decision is appealed to the Executive Committee or submitted to the Board directly, pursuant to Interlocal Agreement, § I, ¶¶ 19.1(a) or (b), providing the Executive Committee or the Board with a written explanation of the issues presented to the Administrative Committee, the reasons for the Administrative Committee's decision, and copies of all pertinent documents considered, in accordance with  Interlocal Agreement, § I, ¶ 19.2.

(x)       Generally, to conduct and administer the day-to-day operations of the Fund and to report to the Board as appropriate, reserving all matters involving policy for the Fund to the Board.

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10.       Fund Administration.

10.1.2  Procedures Governing Selection or Renewal of Third-Party Administrator's Contract.   In accordance with WAC 236.22.038, the standards and procedures for contracting with a third-party Administrator are as follows:

10.1.2(A) Annual renewal of Administrator Contract.  The Administrative Committee, subject to ¶ 10.1.2(B) of this Rule, will annually evaluate the performance of the Administrator and make a recommendation to the Board at its year-end general meeting whether to renew the then current Administrator's Contract.  The Administrative Committee, in making its recommendation, and the Board, in making its decision, shall consider all relevant factors which shall include, but not be limited to:

(1)       The Administrative Committee's evaluation of the effectiveness and quality of the Administrator's performance under the Administrator Contract;

(2)       Evaluations of the Administrator's performance received from the Executive Committee, the Operations Committee, Employees, and Members;

(3)       Comments concerning the performance of the Administrator received from interested parties including the Broker, the Office of the State Auditor, and the Office of the State Risk Manager;

(4)       The reasonableness of the Administrator's compensation, which may, from time to time, involve the Administrative Committee conducting a survey to determine whether the Administrator's compensation is competitive;

(5)       The general ability of the Administrator to operate efficiently, to communicate effectively, to resolve issues amicably, and to manage the Fund consistent with the best interests of the Fund and its Members; and

(6)       The reputation of the Administrator in the community.

10.1.2(B) Competitive Process.  Notwithstanding ¶ 10.1.2(A) of this Rule, the Administrative Committee shall, from time to time as determined by the Board, utilize a competitive process as defined under WAC 236.22.020(6) for the selection of the Administrator.  The competitive process utilized by the Administrative Committee shall include the following features:

(1)       The advertising of the Administrator position in appropriate trade journals;

(2)       The review by the Administrative Committee of all responses to the advertised position;

(3)       The evaluation by the Administrative Committee of the responses which shall include factors such as: (a) knowledge of insurance generally and knowledge of insurance issues directly applicable to public entities; (b) knowledge and experience with Public Utility District operations; (c) knowledge and understanding of the Fund and its operations; (d) experience in investigating and resolving liability, property and health & welfare benefits claims, particularly with respect to public entities; and (e) knowledge and experience with state and federal regulatory issues applicable to the Fund.

(4)       The forwarding of all responses to the Board with a written recommendation by the Administrative Committee.

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11.       Fund Records and Board and Committee Meeting Minutes.

11.1     Official Fund Records.  The Official Records of the Fund shall include:

(a)       The SIA, Operational Rules and any Procedural Memoranda issued by the Administrative Committee and not modified by the Board;

(b)       Approved Minutes of Board meetings;

(c)       Approved Minutes of Executive, Operations and Administrative Committee meetings;

(d)       The Fund's Financial Statements;

(e)       Approved Monthly Receipts and Expenditures Analyses;

(f)        The Fund's Claims Manual;

(g)       The Fund's Risk Management Program; and

(h)       Any other documents or records that the Board may from time to time designate as Official Records of the Fund.

11.2     Custodian and Right to Inspect Records.  [Reserved].

11.3     Approval of Board, Executive and Operations Committee Minutes.  The proposed Minutes for the Board and Executive and Operations Committee meetings shall be mailed to each Designated Director or Committee member within thirty (30) days of the meeting. The proposed Minutes shall be subject to approval or amendment at the next Board or Committee meeting.

11.4     Distribution of Administrative Committee Minutes.  A copy of the Administrative Committee's approved Minutes shall be distributed to each Members' Designated Director, Operations Committee member and Manager within forty five (45) days from the date of the meeting.

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12.       Fund Auditor, Fund Accounting and Financial Reporting Requirements.

12.2     Fund's Investment Related Bookkeeping Procedures.  Procedures governing the Fund's investment of its assets are set forth in detail in the Fund's "Financial Procedures Manual" which, among other things, establishes the Fund's Investment Procedures.

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12.4     Fund Disbursement Procedures When the Administrator Physically Makes the Disbursements.  Procedures governing the Fund's disbursements for Administrative Expenses are set forth in the "Financial Procedures Manual."  Procedures governing the Fund's disbursements for Claims are also set forth in the Fund's "Financial Procedures Manual."

12.5     Accounting Guidelines, Financial Statements and Fiscal Year.  The Auditor shall be responsible for establishing and implementing accounting procedures that accurately record the Fund's financial activities in accordance with applicable law and generally accepted accounting principles for preparing the Fund’s Financial Statements in compliance with same.  The Auditor may delegate some or all of the ministerial aspects of such accounting procedures to the Administrator, but the Auditor shall remain ultimately accountable for the accuracy and regulatory compliance of the Fund's accounting records.  The Fund's fiscal year and the fiscal year of each of its Risk Pools shall be the calendar year, except as may otherwise be provided for the H&W Pool pursuant to § XIV, ¶ 5.

12.6     Fund's Monthly Receipts and Expenditures Analyses.  The Auditor shall cause to be prepared a Monthly Receipts and Expenditures Analysis reflecting generally the sources and amounts of the Fund's revenues and identifying the amounts, payees and purposes of the Fund's expenditures.  Such Analyses shall be presented to the Executive Committee for review and approval at least semi-annually.

12.7     Financial Reporting Requirements.  The Auditor shall distribute copies of the Fund's most recently completed Financial Statements at every General Meeting of the Board and at every Operations Committee meeting.  In addition, the Auditor shall cause the Fund's year-end Financial Statements to be mailed to each member of the Operations Committee upon completion of the Statement in the new calendar year.  Members shall be provided with copies of the Fund's Financial Statements upon written request to the Administrator.  The Auditor, together with the Administrator, shall ensure that all financial reports required of the Fund by State Agencies having jurisdiction over the Fund are timely submitted to such Agencies.  The Auditor, together with the Administrator, shall be the Fund's official representatives to, and shall be responsible for providing the necessary information for, the State Auditor's Office in connection with any audit of the Fund.

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16.       Subgroups and the Purchase of Additional Excess or Different Excess Insurance.

16.1(A)    Subgroup Procedures and Establishing Subgroup Participants.  Upon written request to the Administrator by two or more Members of any Risk Pool identifying the types and amounts of the Proposed Coverage desired, the Administrator will provide a Subgroup Notice to all Risk Pool Members that a Subgroup is being proposed.  Alternatively, the Administrator may invoke the Subgroup Procedures by identifying a Proposed Coverage and sending a Subgroup Notice to all Members.  The Subgroup Notice shall identify the Members making the proposal, if any, and describe the types and amounts of the Proposed Coverage, including any premium price information if it is known.  Each Member shall have fourteen (14) calendar days from the date the Subgroup Notice is sent to inform the Administrator in writing whether the Member wishes to become a Subgroup Participant in the process of attempting to acquire the Proposed Coverage.  Any Member that does not timely inform the Administrator of its election to become a Subgroup Participant will be deemed conclusively to have waived any right to further participate in the Subgroup Procedures.

16.1(B)    Procedures Regarding First Quote and Establishing Remaining Subgroup Participants.  The Administrator shall then contact the Fund's Broker to obtain a quote for the Proposed Coverage for the Subgroup Participants.  The Administrator will provide all Subgroup Participants with the First Quote in writing, identifying the amount of the quote for the Proposed Coverage, along with any related information, and the amount of each Subgroup Participant's Assessment Share for the premium.  Each Subgroup Participant shall have fourteen (14) calendar days from the date the First Quote is received to inform the Administrator in writing whether the Member wishes to become a Remaining Subgroup Participant by continuing to participate in the Subgroup. Any Subgroup Participant that fails to timely notify the Administrator of its desire to continue participating in the Subgroup will be deemed conclusively to have waived any right to further participate in the Subgroup Procedures.

16.1(C)    Remaining Subgroup Participants' Majority Vote on Final Quote.  The Administrator shall then contact the Fund's Broker to obtain a final quote on the Proposed Coverage based on the identities of the Remaining Subgroup Participants.  The Administrator will provide the Final Quote to all Remaining Subgroup Participants in writing, identifying the amount of each Remaining Subgroup Participant's Assessment Share of the premium.  The Remaining Subgroup Participants shall then be required, as a group, by majority vote, either to accept or reject the Final Quote for the Proposed Coverage.  Each Remaining Subgroup Participant shall deliver its vote in writing to the Administrator within fourteen (14) calendar days from the date the Final Quote is received.  Any Remaining Subgroup Participant that does not provide its written vote to the Administrator within this time deadline shall be deemed to have voted in favor of purchasing the Proposed Coverage.

16.1(D)    Establishment of Subgroup/Decisions by Majority Vote.  If the majority vote of the Remaining Subgroup Participants results in a decision to accept the Final Quote and therefore to purchase the Proposed Coverage, a Subgroup will be deemed to have been established with respect to the Proposed Coverage.  The Subgroup Members shall consist of all Remaining Subgroup Participants, whether they voted for or against accepting the Final Quote.  Thereafter, all decisions relating to the Subgroup, including without limitation, all decisions relating to the Subgroup Policy, changes in the Subgroup Policy during the policy year, costs relating to the Subgroup Policy, and admission of Members to the Subgroup, shall be made by majority vote of the Subgroup Members.  All decisions and actions by the Subgroup shall be consistent with and governed by the terms of the SIA and the Operational Rules.

16.1(E)     Premium Assessments for Subgroup Policy.  Each Subgroup Member's Assessment Share of the premium for the Subgroup Policy shall be determined by applying the applicable Formula for Premium Assessments, or in the case of the H&W Pool, the General Assessment Formula, then in effect for all Subgroup Members, but excluding from the calculations all Members of the Risk Pool who are not Subgroup Members.

16.1(F)     Administration of Subgroup Policy and Fund's Payment of Expenses.  Subject to the limitations and allocation of duties between the Fund's Administrator and Broker provided for in ¶¶ 10.1 and 10.2 of § I, Interlocal Agreement, the Fund's Administrator shall handle all administrative aspects of the Subgroup Policy, including without limitation, calculation of Assessment Shares, collection of votes on decisions to be made by Subgroup Members, submission of claims to the Subgroup Carrier, interfacing with the Fund's Broker on any changes to the Subgroup Policy, and overseeing the process of the admission of new members to the Subgroup and any renewals of the Subgroup Policy.  All costs and fees of the Administrator for these services shall be paid by the Risk Pool of which the Subgroup members are Members.

16.1(G)    Subgroup Coverage Litigation Expenses.  All costs, expenses and attorneys' fees arising from any dispute with the Subgroup Carrier regarding whether coverage is provided for any Claim against one or more Subgroup Members or their Employees shall be borne by the Subgroup Members in the same proportion as each paid toward the premium for the purchase of the Subgroup Policy; provided, however, if the Coverage Litigation relates to whether the Fund has paid on the applicable Risk Pool’s underlying self-insured Coverage sufficient to trigger the coverage of the Subgroup Policy, and if the Fund's failure to pay the amount alleged by the Excess Carrier results from a decision of the Board, then the applicable Risk Pool shall reimburse all costs, expenses and attorneys' fees reasonably expended by the Subgroup Members litigating such issue if it is ultimately determined in the Coverage Litigation that the Fund wrongfully failed to pay on its underlying Risk Pool Coverage.  The Subgroup shall decide all issues relating to retention of counsel and prosecution of the Coverage Litigation by majority vote; provided, however, that only those Subgroup Members with claims asserted in the Coverage Litigation may participate in making decisions regarding settlement; and provided further, that in Coverage Litigation involving less than all Subgroup Members, those Members involved can, as a group, opt out of control of the Coverage Litigation by the majority vote of all Subgroup Members by agreeing to be solely or jointly responsible for all costs and legal fees incurred thereafter.

16.1(H)    Renewals of Existing Subgroup Policies.  The Subgroup Procedures set forth in ¶¶ 16.1(A) through 16.1(C) and 16.1(I) and 16.1(J) of this Rule shall govern any Subgroup Renewals, including extensions by endorsement, of any existing Subgroup Policy.  In the context of a Subgroup Renewal, it shall be the responsibility of the Fund's Broker to provide the Administrator with no less than sixty (60) days written notice of any Subgroup Renewal deadline.  The Administrator shall then initiate the Subgroup Procedures within sufficient time for compliance generally with the notice provisions of this ¶ 16 prior to the expiration of the Subgroup Renewal deadline.  All Subgroup Members and all Fund Members applying to become Subgroup Members will timely comply with all requests by the Administrator for information needed for such Subgroup Renewal.

16.1(I)      Admission of Member to Subgroup Despite Previous Waiver.  Notwithstanding a Member's waiver of any right it may have had to participate in a particular Subgroup, the Subgroup Participants or Subgroup Members at the time of a Fund Member's application for admission, may, whether during the Subgroup Procedures or during the Subgroup Policy year, permit that Member to become a Subgroup Participant or Subgroup Member by majority vote of the existing Subgroup Participants or Subgroup Members.  Any Member desiring to be admitted as a member of any Subgroup shall make written application therefore through the Administrator.  Any New Subgroup Member granted admission to a Subgroup shall pay any additional costs or premiums required by the Subgroup Carrier in connection therewith.

16.1(J)     Revised Subgroup Assessment Shares.  If two or more Members are admitted to a Subgroup at the same time, those New Subgroup Members shall pay any additional premium required by the Subgroup Carrier in proportion to their respective Assessment Shares calculated under the applicable Assessment Formula then in effect. (See ¶ 16.1(E) above).  If there is no additional premium for covering the New Subgroup Members, then each Subgroup Member's Assessment Share of the original premium for the Subgroup Policy shall be credited or reimbursed to establish each's Revised Subgroup Assessment Share as follows:  The applicable Assessment Formula in effect at the time the Subgroup paid the premium on the Subgroup Policy shall be rerun including all Subgroup Members and New Subgroup Members, but excluding all other Members of the Fund.  If coverage under the Subgroup Policy has not commenced and the premium has not been paid, then Subgroup Members and New Subgroup Members will each pay their Revised Subgroup Assessment Shares to the Administrator.  If the Subgroup has already paid the premium for the Subgroup Policy and only a portion of the Policy Year remains, the New Subgroup Members' Revised Subgroup Assessment Shares shall be adjusted downward by the percentage of the Subgroup Policy year that has elapsed.  Each New Subgroup Member shall then pay the amount of its Revised Subgroup Assessment Share, after adjustment, to the Administrator, who shall then reimburse the money received to the original Subgroup Members in the same ratio as the Assessment Shares they paid toward the premium to purchase the Subgroup policy.

16.1(K)    Notice Deadlines, Administrator's Discretion to Alter Notice Periods, and Content of Administrator's Notice.  For purposes of the notice provisions of this ¶ 16, if the deadline for response to the notice falls on a weekend or federal or Washington state holiday, the deadline shall be extended to the first business day thereafter.  The time deadlines to provide or respond to notices stated in this ¶16 may be shortened or extended by the Administrator if reasonably necessary to comply with requirements imposed by quoting insurance companies or if otherwise appropriate in the judgment of the Administrator.  All notices issued by the Administrator under this ¶ 16 shall specifically identify the then current stage of the Subgroup Procedures, and state the date a response to the notice is due and the consequences of failure to timely respond to the notice.  In all events, the response date set forth in any Administrator's notice hereunder shall control and supersede the deadlines set by the notice provisions in this ¶ 16.  Response by facsimile to all notices contemplated by this subsection shall constitute an acceptable written response.

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17.       Risk Management Procedures.  [Reserved]

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18.       New Members.

18.1     New Member Admission Requirements.

18.1(A)    Disclosure Requirements.  A Local Governmental Entity applying to the Administrative Committee for Membership in a Risk Pool shall: (1) identify in writing all liability claims made against it in the five preceding calendar years, and the nature, date, amount sought, amount paid, and costs and attorneys' fees incurred in connection with each such claim; (2) provide information establishing the amount of its payroll and gross revenues for the five fiscal years immediately preceding the date of request for admission; (3) identify the member of its staff responsible for handling liability claims; and (4) provide any other information requested by the Administrative Committee.

18.1(B)    Administrative Committee's Recommendation to the Board.  The Administrative Committee shall make a written recommendation to the Board regarding admission to the Risk Pool of any Local Governmental Entity.  The Administrative Committee's recommendation shall include (1) an assessment of the Risks and benefits posed to the Risk Pool if the applicant becomes a New Member; and (2) any special terms that should be imposed upon the applicant as a condition to Membership in the Risk Pool as a result of its claims history or other factors, and shall state the reasons therefore.

***

19.       Appeal Procedures and Administrative Committee's Primary Jurisdiction.

19.2.4       Modification of Appeal Procedures.  The Executive Committee, in its discretion, may, for good cause shown, modify or waive any of the notice or other procedural requirements contained in Interlocal Agreement, § I, ¶ 19.2.

19.2.5.      Time Limits for Appeal.  Members or Employees desiring to appeal an Appeal Issue shall comply with the following time limits for perfecting the right to appeal:

(A)   With respect to Coverage Determinations: Within thirty (30) days from the date the Administrator mailed the Coverage Determination, the Member or Employee affected shall deliver to the Administrator a written request for the Administrative Committee to reconsider its Coverage Determination.  The Request for Reconsideration shall set forth in detail the reasons asserted for reversal or modification of the Coverage Determination.

(B)    With respect to all other Appeal Issues: Any Member desiring to appeal the same shall deliver to the Administrator a written Notice of Appeal setting forth in detail the action or decision of the Administrative Committee that is being contested and the reasons therefore.  For a Notice to be timely, it must be delivered to the Administrator within thirty (30) days from the date the Committee specifically provided the Member with verbal or written notice of the Committee's decision; and in all other circumstances, within one hundred twenty (120) days from the actual date of the Committee's decision or action being contested.

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19.2.7       Processing of the Appeal. 

(A)      Upon timely receipt of a Request for Reconsideration or a Notice of Appeal (hereinafter, collectively, "Notice"), the Administrator shall promptly deliver the Notice to the Administrative Committee and, within a reasonable time, convene a meeting of the Committee, either in person or by teleconference, to consider the Notice. 

(B)       Within thirty (30) days of the Administrator's receipt of a timely Notice, the Administrative Committee shall inform the Member or Employee in writing of the Committee's decision on the Notice and the reasons for the decision.

(C)       If the Member or Employee still wishes to contest the Administrative Committee's decision, the Member or Employee may seek review by the Executive Committee as contemplated in Interlocal Agreement, § I, ¶ 9.2.1(d) by delivering its written Notice to the Administrator within thirty (30) days from the date the Administrator communicated the Committee's decision on the Notice.

(D)      The Executive Committee shall meet as soon as is reasonably practicable, either face-to-face or by teleconference, to decide the Appeal.  The Member or Employee involved in the Appeal and the Administrative Committee may make written submissions to the Executive Committee.  The Executive Committee's decision of the Appeal shall be made in writing and shall be delivered to the Member or Employee involved, with a copy mailed to all other Fund Members.

(E)       Any Member or Employee permitted by Interlocal Agreement, § I, ¶ 19.2.3 may seek review of the Executive Committee's decision of the Appeal by delivering a written Notice thereof to the Administrator within thirty (30) days from the date of notification of such decision.  Upon receipt of a Member's or Employee's Notice, the Administrator shall promptly notify the Administrative Committee thereof, and shall, as soon as reasonably practicable, convene a Special Meeting of the Board to review and decide the Appeal from the decision of the Executive Committee. Any written materials any Member wishes the Board to consider in deciding the Appeal shall be delivered to the Administrator at least ten (10) days prior to the Board's meeting date.  The Administrator shall promptly forward all such written materials to each Director.  At such Special Meeting, the Member or Employee, the Appeal Representative, and attorney may appear and present the position of the Member or Employee on the Appeal Issue being reviewed. The Administrator, the Administrative Committee and General Counsel may also participate in the discussions and presentations.  The hearing on the Appeal before the Board may be held, at the discretion of the Board as permitted by law, in Executive Session, and in such event, all written materials submitted shall also be treated as strictly confidential.

(F)       By Majority Vote, the Board may affirm the Executive Committee’s decision, or may reverse or modify that decision.

***

30.       Supplemental General Provisions.  [Reserved]

SECTION II - Definitions

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30.       Supplemental General Provisions.  [Reserved]

SECTION III – Commercial General Liability Coverage

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2.         Insuring Agreement and Conditions for CGL Coverage.

2.2       Coverage Limit.  [Reserved]

2.3       Deductible.  [Reserved].

2.5       Pre-Approval Procedures.

2.5(A) Procedures for Pre-Approval of Specific Risks.  The CGL Coverage, § III, ¶ 2.5, identifies a number of types of Risks that must be submitted to the Administrator to be Pre-Approved as a condition precedent to the Fund's Coverage.  The purposes for requiring Pre-Approval of such Risks include: (1) Allowing the Fund an opportunity to evaluate the existence of an Agency relationship between the Member and the Third Party involved which is a condition precedent in certain circumstances to the Fund's authority to provide Coverage for the Risk; (2) Giving the Fund's Administrator the opportunity, prior to the Member's acceptance of responsibility for the Risk, to work with the Member on risk-shifting issues in the negotiations with a Third Party as part of the Fund's Risk Management Program; (3) Allowing the Fund to evaluate the exposure posed to the Fund by the Risk proposed for Coverage and, if the Risk qualifies as an "Additional Risk," to refuse to extend Coverage for the Risk, or to extend Coverage with Conditions (see, ¶ 2.5.3(A)(5) below); and (4) Providing an opportunity for the Fund, through the use of such Conditions (e.g., treating the Risk as an Added Exposure Contract warranting an agreed increase in the Member's Employee Hours Worked under the Liability General Assessment Formula), to minimize any unfair impact the extension of such Coverage for a Member might have on the other Fund Members by requiring the Member to assume some of the cost of the Fund's increased exposure from the Risk.

2.5(B)  Basic Pre-Approval Procedures.  Op. Rule § III, ¶ 2.5.3 establishes detailed procedures for Members to obtain Pre-Approval for adding persons or entities as Additional Insureds under the SIA and/or the Fund's Excess Liability Policies.  The Pre-Approval procedures in ¶ 2.5.3, and the principles underlying those procedures, are substantially the same for the other types of Risks identified in CGL Coverage, § III, ¶ 2.5 requiring Pre-Approval.  Thus, the basic Pre-Approval procedures for all such Risks shall be those in Op. Rules, § III, ¶ 2.5.3 below, adopted and modified as follows for all Risks subject to Pre-Approval in CGL Coverage, § III, ¶ 2.5, except for Pre-Approval of Additional Insureds which shall be governed by ¶ 2.5.3 below.

(1)    Request for Pre-Approval.  The Member desiring the extension of Coverage shall first submit a written Request for Pre-Approval to the Administrator, providing information about the Risk and the proposed transaction or relationship and any other information requested by the Administrator.

(2)    Pre-Approval Provisions Applicable to Specific Types of Risks Set Forth in CGL Coverage § III, ¶ 2.5. The procedures and requirements set forth in Op. Rules § III, ¶ 2.5.3(A)(2) through (A)(5) shall constitute the basic Pre-Approval procedures and requirements for the Risks identified in CGL Coverage, § III, ¶ 2.5.1 through 2.5.7, to the extent it is reasonable and practical to apply them under the circumstances, as determined by the Administrative Committee; provided, however, that Pre-Approval for Members' "Extraordinary Activities" and "Joint Ventures" (see, CGL Coverage, § III, ¶¶2.5.5 and 2.5.6) shall not require any evaluation of "Agency", and therefore, Op. Rules, § III, ¶¶ 2.5.3(A)(2) and (A)(2)(a) shall not apply to Requests for Pre-Approval for these two types of Risks.

***

2.5.3    Adding Persons or Entities as Additional Insureds Under the Liability Coverage and Excess Liability Policies.

2.5.3(A)          Establishing Additional Insureds Under SIA.

(1)    Coverage Request.  Except as permitted under ¶ 2.5.3(A)(8) of this Rule, in order to establish Additional Insured status, the Agent, Volunteer or Member must first submit a written request for Additional Insured status ("Coverage Request") to the Administrator, providing the information requested by the Administrator.

(2)    Review of Coverage Request by the Administrator and Determination of "Agency" Relationship and Evaluation of "Additional Risk" to the Fund.  Upon receipt, the Administrator shall review the Coverage Request and conduct such inquiry as is necessary in order to confirm the specific activities to be conducted by the proposed Additional Insured and to determine whether or not such activities probably constitute a relationship between the proposed Additional Insured and the Member which legally qualifies the person or entity as an Agent of the Member, and further, to determine whether or not such activities constitute an "Additional Risk" to the Fund.

(a)    Factors re "Agency" Relationship.  In conducting the inquiry, the Administrator shall be guided by the following elements which must exist in order for the relationship between the Member and its proposed Additional Insured to legally be deemed one of Agency:

(i)     The mutual manifestation of assent that the Additional Insured shall

(ii)    Act on behalf of the Member and

(iii)   Be subject to the Member's control in the essential way the Additional Insured will be performing the work.

Other factors the Administrator should consider in the inquiry include the following:

(iv)   There must be a written agreement between the proposed Additional Insured and the Member regarding the transaction ("Agency Agreement").

(v)    The Agency Agreement must set forth the scope of the activity to be conducted by the proposed Additional Insured.

(vi)   In evaluating the existence of an Agency between the Member and the proposed Additional Insured, factors to be considered in assessing the nature and the degree of the Member's control are the nature of the business, time, place, duration, quantity and nature of work performed, skill and supervision required, furnishing of equipment, materials and supplies, payment of necessary expenses, basis of compensation for work, right to hire and discharge assistants, and right to terminate employment, but none of these factors is conclusive.

(vii)  The activity described in the Agency Agreement and the Coverage Request must be an activity which is not prohibited under any applicable law.

(b)    Determination of "Additional Risk".  During the course of the inquiry, the Administrator shall also address whether or not the activity described in the Coverage Request poses unique or substantial additional exposure to the Liability Pool ("Additional Risk"), and whether or not such Additional Risk should be undertaken by the Fund and, if appropriate, the Conditions under which the Fund should accept the Additional Risk.  (See, ¶ 2.5.3(A)(5).)

(3)    Determinations by the Administrator.  Unless the Administrator refers the Coverage Request to the Administrative Committee as provided for in ¶ 2.5.3(A)(4) of this Rule, the Administrator shall either deny the Request on the basis that (a) the Coverage Request does not establish an Agency relationship between the Member and the proposed Agent or (b) the activity described in the Request constitutes an undue risk to the Liability Pool, or approve the Request subject to Conditions, if any, as set forth in ¶ 2.5.3(A)(5) of this Rule.

(4)    Determinations by the Administrative Committee.  In the event a Coverage Request is referred to the Administrative Committee, the Administrative Committee shall review the Request and make such further inquiry as it deems appropriate.  After completing its review, the Administrative Committee shall make the same evaluations and determinations set forth for the Administrator in ¶ 2.5.3(A)(3) above.

(5)    Conditions for Approval of the Request.  In addition to the requirements for issuance of the Certificate of Insurance set forth in ¶ 2.5.3(A)(6), the Administrator or the Administrative Committee may impose certain other requirements as conditions for approval of the Coverage Request ("Conditions").  The Conditions may include, for example, treating the Request as an Added Exposure Contract and working with the Member to establish a specified number of Contract Conversion Hours to be added to a Member's Employee Hours Worked under the General Assessment Formula (see § VIII, ¶ 5.2), in recognition of the Additional Risk to the Liability Pool posed by the Additional Insured's activities. 

(6)    Issuance of Certificate of Insurance.  Upon approval of the Coverage Request by the Administrator or the Administrative Committee, and subject to the Conditions, if any, established under ¶ 2.5.3(A)(5), the Administrator shall issue a Certificate of Insurance which shall state the following:

(a) The effective date and the duration of the Certificate of Insurance;

(b) That the person or entity is an Additional Insured only so long as the person or entity acts in good faith, and within the scope of the activity and the control of the Member as stated in the Request and the Agency Agreement;

(c) That the person or entity's status as an Additional Insured shall automatically terminate in the event the person or entity acts in bad faith, exceeds the scope of activity constituting the Agency as set forth in the Request and Agency Agreement, performs independently of the Member's control as set forth in the Request and Agency Agreement, or violates any other written condition of the Certificate of Insurance;

(d) That the person or entity shall be bound by the applicable provisions of the SIA and Operational Rules, and that such Additional Insured status shall automatically terminate in the event the person or entity violates any material condition imposed by the SIA or Operational Rules; and

(e) That a copy of the SIA and Operational Rules is available for inspection and copying (at the expense of the Insured Agent or Insured Volunteer) at the office of the Administrator.   

(7)    Extension or Renewal of the Certificate of Insurance.  Any extension or renewal of the Certificate of Insurance must be made by a separate Coverage Request in conformance with all conditions set forth in this Rule.

(8)    Emergency Exception to "Additional Insureds" Pre-Approval Requirements.  A person or entity may be designated as an "Emergency Additional Insured" by a Member in an emergency situation only if the following conditions have been met:

(a) A written memorandum is signed between the Member and the Emergency Additional Insured establishing the existence, date and time the Member established such status;

(b) As soon as possible under the circumstances, the Member must notify the Administrator in writing (which may be by facsimile) of the identity of the person or entity, the activity performed or to be performed by the person or entity, the duration of the activity, the control and supervision by the Member of the activity, and such other information as the Administrator may request, and in addition, provide a copy of the memorandum between the Member and the person or entity conducting the activity (see, ¶ (a) above);

(c) The person or entity conducting the activity must assent to the control of such Employee; and

(d) The activity in fact must be supervised, directed and controlled by an Employee of a Member.

Under no circumstances shall the person or entity's status as an Emergency Additional Insured extend beyond 72 hours from the time the Member engaged the person or entity to conduct emergency activities on behalf of the Member, unless approved in writing by the Administrator or the Administrative Committee. Furthermore, the Fund reserves the right to withdraw Additional Insured status at any time the Administrator or Administrative Committee determines that the facts and circumstances surrounding the emergency activities do not legally qualify the person or entity as an Agent of the Member.

2.5.3(B)   Establishing Additional Insureds Under the Fund's Excess Liability Policies.

(1)    Coverage Request.  A Member, through the Administrator, may request the Administrative Committee to add certain persons or entities as Additional Insureds under one or more of the Excess Liability Policies.  The Administrator shall then convey the Coverage Request to the Broker for presentation to the appropriate Excess Carrier.

(2)    Review/Approval of Coverage Request.  The Administrator shall inform the Administrative Committee of the acceptance or non-acceptance of the Coverage Request by the Excess Carrier and the conditions or additional premium, if any, the Carrier attached to providing the Additional Insured coverage.  The Administrative Committee shall then evaluate the Coverage Request and information from the Broker and determine what impact approval of the Coverage Request may have on the Members of the Liability Pool (e.g. whether it is likely to result in an increase the premium to the Risk Pool at the renewal date for the Excess Policies).  The Administrative Committee shall then approve the Request subject to Conditions, if any, as set forth in ¶ 2.5.3(B)(3) of this Rule, or deny the Request.  The Administrator shall then inform the Member of the approval and any Conditions, or the denial of the Request.  In the event of approval, the Administrator shall coordinate with the Broker to ensure that the Member and Additional Insured receive written certification of the addition of the persons or entities as Additional Insureds under the applicable Excess Policies. 

(3)    Conditions of Approval.  In the event the Excess Carrier proposes to charge any additional premium for such Additional Insured under the Excess Policy, then the payment thereof by the Member shall be a Condition of Approval of the Request.  The Administrative Committee may impose such other Conditions to the approval of the Request as the Committee deems in the best interests of the Fund. The Member shall then either commit to the Administrator that the Member will pay such additional premium and adhere to any additional Conditions, or alternatively, instruct the Administrator to withdraw the Coverage Request.  The Member shall, upon receipt of a billing statement from the Administrator, immediately reimburse the Fund for any such additional premium charge the Risk Pool advances for the Member.

***

2.5.7    Other Risks Requiring Pre-Approval.  [Reserved]

***

2.7       Other Insurance and Third Party Indemnifications.

2.7.2.1(g) Other Types of Risk With Respect to Which the Fund's Coverage is Excess.    [Reserved]

***

3.         Exclusions for CGL Coverage.

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3.9       Procedures for Determining a Member's Good Faith and Reasonable Belief that the Action Giving Rise to the Claim was Lawful.

(A)      Investigation by Administrator.  If there is a factual question whether Exclusion ¶ 3.9 applies to a particular Claim, the Administrator shall investigate the facts and circumstances surrounding the activity of a Member which resulted in the Claim and shall then report the results of the investigation to the Administrative Committee with a recommended Coverage Determination.

(B)       Determination of Good Faith Belief that the Activity was not Prohibited.  The Administrative Committee shall consider the report by the Administrator and shall conduct such further investigation as deemed necessary.  The Administrative Committee shall then, with the assistance of Fund Counsel, make a determination, in its discretion, as to whether or not the activity was entered into with the good faith belief that such activity was not prohibited by applicable State and Federal law.

***

3.15     Requirements for Indemnification and Hold Harmless Agreement Re: "Loaned Equipment".  The indemnification and hold-harmless agreement referred to in CGL Coverage, § III, ¶ 3.15(b) shall clearly state that the Borrower of the Equipment is utilizing it at it's own risk and that the Borrower further agrees to indemnify the Member from any and all liability arising out of or in connection with operation of the Equipment.  If requested by the Administrative Committee, the Member shall provide the Committee with proof of insurance held by the Borrower sufficient to cover the Borrower's indemnification.

3.16     Procedures for Determining and Pre-Approving Coverage for "Extraordinary Activities" of Members. 

(A)      Investigation By Administrator.  Upon receipt of a Request for Pre-Approval, the Administrator shall investigate the facts and circumstances of the Member's proposed Extraordinary Activity. The Administrator shall also perform such investigation of the Member's un-Pre-Approved activity that in fact may constitute "Extraordinary Activity" which has already resulted in a Claim. The Administrator shall report the results of the investigation to the Administrative Committee, including the opinion of the Administrator as to whether or not the activity constitutes an "Extraordinary Activity".

(B)       Determination of Extraordinary Activity.  The Administrative Committee shall review the Administrator's report and shall conduct such further investigation as deemed necessary, and shall then, in its discretion, determine whether or not the activity of the Member qualifies as an Extraordinary Activity.

(C)       Pre-Approval of Proposed Extraordinary Activity and Conditions.  The Administrative Committee, in its discretion, shall decide whether or not to Pre-Approve Coverage for the Extraordinary Activity.  The Administrative Committee may, in its discretion, approve the Extraordinary Activity upon certain Conditions reasonably related to the exposure the Additional Risk resulting from the Extraordinary Activity poses to the Liability Pool (e.g., including converting the "exposure" to additional Employee Hours Worked to be added to this Formula Component of the Member under the General Assessment Formula). 

(D)      Denial of Coverage for Claim Arising from Unapproved Extraordinary Activity.  If the Administrative Committee determines that a Claim arises from a Member's activity that constituted Extraordinary Activity which was not Pre-Approved, Coverage therefore may be denied per Exclusion ¶ 3.16 in § III, CGL Coverage.

***

30.       Supplemental General Provisions.  [Reserved]

SECTION IV – Public Officials & Entity Coverage

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30.       Supplemental General Provisions.  [Reserved]

SECTION V - Auto Liability Coverage

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30.       Supplemental General Provisions.  [Reserved]

SECTION VI - Pollution Liability Coverage

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2.         Insuring Agreement and Conditions for Pollution Coverage.

2.2.1    Example of Coverage for Pollution Damage to A Member's Owned Property.  For example, the Fund would be required to pay the Member only the amount it would take to contain the Pollution on the Member's Owned Property and keep it from spreading to Third Party Property, even if an Environmental Enforcement Agency was actually requiring the Member to incinerate the Pollution on the Member's Owned Property at a much greater cost than would be required for "containment" of that Pollution.

***

3.         Exclusions for Pollution Coverage.

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3.1.3    "Basic Coverage" for Pollution Release on Members' Owned Property Which Causes Property Damage to Third Party Property.

(A)      Responsibility for Costs of Tests re: Environmental Damage.  Initially, the Member shall have the obligation to undertake the tests necessary to establish that a Pollution Release on Owned Property either (1) has already caused Environmental damage to Third Party Property, or (2) falls within the Coverage provided in Pollution Coverage, § VI, ¶¶ 3.1.3 through 3.1.6 for Members' Owned Property. The Fund shall have the right, through the Administrative Committee, to have its own tests performed for these purposes.  If the Administrative Committee determines that either requirement (1) or (2) above is satisfied, the Fund shall reimburse the Member for the reasonable costs of such tests.

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3.1.5    "Necessarily Related" Remediation Costs.

(A)      Administrative Committee Determination of Whether Coverage is Provided for Cleanup Costs or Containment Costs.  The Administrative Committee, on behalf of the Fund, may hire its own expert to aid the Committee in determining whether, in a "Necessarily Related" or "Repollution Avoidance" context (see Pollution Coverage, § VI, ¶¶ 3.1.5 and 3.1.6), Cleanup of all or a portion of the Pollution on a Member's Owned Property or Containment of the Pollution on the Member's Owned Property is less costly to the Liability Pool, and if the Containment Costs are less, what the amount of Coverage provided by the Liability Pool will be as measured by the estimated Containment Costs.

3.1.6    "Repollution Avoidance" Remediation Costs. 

(A)      Administrative Committee Determination of Whether Coverage is Provided for Cleanup Costs or Containment Costs.  Refer to Operational Rule 3.1.5(A) above.

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30.       Supplemental General Provisions.  [Reserved]

SECTION VII - Claims Resolution Rules & Procedures

1.         Members' Duties.

(A)      Reporting of Liability Claims Incidents that Might Lead to Liability Claims.  On or before the last day of each month, each Member shall report to the Administrator, any Incidents that happened or Liability Claims that were made against the Member or its Employees during that month to the extent Coverage from the Liability Pool for such events has not already been requested, including without limitation, Liability Claims for an amount less than the Deductible.  The information to be reported to the Administrator shall include:

(1)    The date of loss;

(2)    The name of Claimant;

(3)    The amount claimed;

(4)    The amount paid by the Member or its Employee on such Claim, if any; and

(5)    A brief description of the nature of the Claim.

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6.         Settlements.

6.3       Member Settlement Ceiling.  [Reserved]

***

7.         Payment of Coverage.

7.1       Fund Reimbursement of the Costs Incurred by a Member to Repair or Replace Damaged Property.

(A)      Repairs made by a Third-Party Contractor.  For a Covered Liability Claim for damage to Third Party Property, the Member may retain a third-party contractor to make repairs damaged Third-Party Property, whether real or personal, upon receiving the approval of the Administrator.  The Administrator may condition such approval upon a Member obtaining bids for the repairs or estimates of the cost of replacement.  The Fund shall reimburse the Member for the reasonable costs of such approved repairs or replacement.

(B)       The Member May Utilize its own Employees or Agents to Repair Third-Party Property.  For a Covered Liability Claim for damage to Third-Party Property, the Member may utilize its own Employees, so or long as they are qualified, to make repairs to damaged property, but only upon receiving the prior approval of the Administrator, unless an emergency exists as provided in ¶ 7.1(C) of this Rule.  The Fund shall reimburse the Member for the reasonable costs incurred by the Member, to the extent they are directly attributable to the repair work performed in connection with the damaged property.  What repair costs are reimbursable as reasonable costs for a Member's use of its own Employees and Equipment to make such repairs shall be determined by the Administrative Committee.

(C)       Emergency Repairs.  Notwithstanding ¶ 7.1(B) of this Rule, the Fund shall reimburse the Member for the reasonable costs incurred by the Member for repairs to damaged property performed by the Member's Employees without the prior approval of the Administrator in emergency situations which do not allow the Member sufficient opportunity to obtain such prior approval.  In such event, the Member must notify the Administrator, as soon as possible, of the emergency repairs and use its best efforts to assure that the repairs are conducted by qualified Employees.

***

30.       Supplemental General Provisions.  [Reserved]

SECTION VIII – Liability Pool General Assessment Formula

30.       Supplemental General Provisions.  [Reserved]

SECTION IX - Premium Assessment Formula

30.       Supplemental General Provisions.  [Reserved]

SECTION X – General Property Coverage

30.       Supplemental General Provisions.  [Reserved]

SECTION XI – Auto Physical Damage Coverage

30.       Supplemental General Provisions.  [Reserved]

SECTION XII – Property Pool General Assessment Formula

30.       Supplemental General Provisions.  [Reserved]

SECTION XIII – Property Pool Premium Assessment Formula

30.       Supplemental General Provisions.  [Reserved]

SECTION XIV – Health & Welfare Coverage

30.       Supplemental General Provisions.  [Reserved]

SECTION XV - Health & Welfare Pool General Assessment Formula

30.       Supplemental General Provisions.  [Reserved]