Be it enacted by the Senate and House of Representatives
in General Court assembled, and by the authority of the same,
SECTION 1. Notwithstanding the provisions of any general or special law to the contrary, upon application of a public employer self-insurance group holding or applying for a certificate of approval from the commissioner of insurance pursuant to chapter forty M of the General Laws, the commonwealth, acting by and through the secretary of consumer affairs and business regulation, hereinafter referred to as the secretary, shall guarantee the payment of losses by said group, to the extent and in the manner authorized by the provisions of this act, in the event that the group's loss fund and accumulated surplus contributions are insufficient or unavailable to meet such losses. Said secretary may issue rules and regulations to govern the implementation of this act. Such group shall qualify for such guaranty only if its total actual or estimated annual premium monies amount to at least three million dollars, and only if it satisfies all applicable requirements of the rules and regulations promulgated by the secretary pursuant to this act. The total amount of losses guaranteed under this act for all such self-insurance groups shall not exceed ten million dollars in the aggregate.
SECTION 2. The secretary shall approve the form, terms and conditions of a guaranty issued pursuant to this act, and shall execute and deliver on behalf of the commonwealth to a qualifying public employer self-insurance group one or more instruments containing such guaranty and any related agreements containing such terms, conditions and covenants of the commonwealth as said secretary may deem reasonable; provided, however, that the secretary shall issue a preliminary guaranty to a group which does not hold a certificate of approval from the commissioner of insurance pursuant to chapter forty M of the General Laws, and shall issue a full guaranty to such group only when its application for such certificate of approval is granted. Without limiting the generality of the foregoing, such agreements may take the form of a letter of credit, or an agreement to reimburse the issuer of a letter of credit or other credit facility for expenditures related to payments guaranteed pursuant to section one.
The full guaranty provided to any such group under this act shall terminate after ten years; provided, however, that such guaranty shall apply to any loss occurring during such ten year period. Both a preliminary and a full guaranty under this act shall be deemed to satisfy the aggregate excess insurance requirements of clause (8) of subsection (A) and paragraph (1) of subsection (B) of section four of chapter forty M of the General Laws.
The full faith and credit of the commonwealth shall be pledged for a guaranty provided for in this act.
SECTION 3. Claims by a public employer self-insurance group against a guaranty executed pursuant to this act shall be filed with the secretary. If the secretary finds that the loss fund and accumulated surplus contributions of such group are insufficient to meet losses, the commonwealth shall without further appropriation provide such group the amount necessary to meet such losses in accordance with the terms of the guaranty. Any funds provided to such group pursuant to this section shall be deemed to be a loan to such group, and shall be repaid by such group to the commonwealth from any monies available to such group for such purposes, in accordance with a schedule to be determined by the secretary, but in no event shall such schedule provide for the term of any such loan to be greater than five years. The amount of such loan shall not bear interest prior to repayment or reimbursement.
SECTION 4. In the event that any public employer self-insurance group which receives a loan pursuant to section three is unable to repay such loan because it becomes insolvent or for any other reason, the individual members of such group shall repay such loan, and the secretary shall assess such members for this purpose.
SECTION 5. Any public employer self-insurance group which is issued a guaranty pursuant to this act shall report at least annually on its operations to the secretary and to the house and senate committees on ways and means. Such report shall document such progress of such group in accumulating sufficient loss reserves or in obtaining reinsurance to satisfy the aggregate excess insurance requirement of chapter forty M of the General Laws after such guaranty terminates. Such report shall also include the names of any public employers who are denied membership in such group or whose membership is terminated, and the reasons for such denial or termination. The secretary shall report immediately to the house and senate committees on ways and means in the event that it becomes necessary to make loans and issue bonds pursuant to this act, or in the event that said secretary determines that further guaranties are not needed because the purchase of commercial reinsurance is feasible or for any other reason.
SECTION 6. For the purpose of providing funds to make loans pursuant to section three, the state treasurer shall, upon the request of the governor, issue and sell bonds of the commonwealth in an amount to be specified by the governor from time to time, but not exceeding, in the aggregate, the sum of ten million dollars. All bonds issued by the commonwealth as aforesaid shall be designated on their face, Massachusetts Municipal Self-Insurance Group Loan, Act of 1986. Such bonds shall be issued for such maximum term of years, not exceeding twenty years as the governor may recommend to the general court pursuant to Section 3 of Article LXII of the Amendments to the Constitution of the Commonwealth; provided, however, that all such bonds shall be payable not later than June thirtieth, two thousand and seventeen. Bonds and interest thereon issued by the commonwealth under the authority of this section shall, notwithstanding any other provisions of this act, be general obligations of the commonwealth.
SECTION 7. The state treasurer may borrow from time to time on the credit of the commonwealth such sums of money as may be necessary for the purpose of meeting payments authorized by section two of this act and may issue and renew from time to time notes of the commonwealth therefor, bearing interest payable at such time and at such rates as shall be fixed by the state treasurer. Such notes shall be issued and may be renewed one or more times for such terms, not exceeding one year, as the governor may recommend to the general court pursuant to Section 3 of Article LXII of the Amendments to the Constitution of the Commonwealth, but the final maturities of such notes, whether original or renewal, shall not be later than June thirtieth, nineteen hundred and ninety-seven. Notes and interest thereon issued under the authority of this section shall, notwithstanding other provisions of this act, be general obligations of the commonwealth.