State securities bureau seeks tighter controls on LGC risk pools
The bureau presented suggested legislation to a legislative oversight committee Wednesday that includes separate boards for each risk pool and a prohibition of transferring funds between different pools.
The legislation stems from a hearings officer’s order requiring the Local Government Center to reorganize and return more than $50 million in surplus funds to towns, cities, school districts and counties that purchased health, liability and workers compensation insurance from the organization.
The order also said the organization was incorporated illegally as a nonprofit limited liability company under Delaware law. Nonprofits cannot be LLCs under New Hampshire law, the order noted.
The LGC has appealed the order to the Supreme Court.
The Committee to Review the Hearings Officer’s Report heard Bureau of Securities Regulations’ consultant Michael Coutu say each risk pool should be separate with its own board of directors and should not share board members with other pools.
Coutu was to work with the LGC to implement the hearing’s officer’s order, but the board of LGC’s health insurance risk pool, HealthTrust, voted not to proceed with that arrangement.
The risk pool board of directors should not include the officers of the organization, Coutu told the committee, in order to have greater independence.
Insurance companies are highly regulated and compliance is costly, Coutu said, which defeats the goal of low-cost insurance.
The committee is expected to develop recommendations for legislation to clarify state law governing the risk pools, but it may wait until the Supreme Court decides the LGC’s appeal of the order.