wa-law.org > bill > 2025-26 > HB 1842 > Original Bill
This chapter is intended to provide the exclusive source of local government entity authority to individually or jointly self-insure risks, jointly purchase insurance or reinsurance, become a captive owner as defined in RCW 48.201.020, and to contract for risk management, claims, and administrative services. This chapter shall be liberally construed to grant local government entities maximum flexibility in self-insuring to the extent the self-insurance programs are operated in a safe and sound manner. This chapter is intended to require prior approval for the establishment of every individual local government self-insured employee health and welfare benefit program and every joint local government self-insurance program. In addition, this chapter is intended to require every local government entity that establishes a self-insurance program not subject to prior approval to notify the state of the existence of the program and to comply with the regulatory and statutory standards governing the management and operation of the programs as provided in this chapter. This chapter is not intended to authorize or regulate self-insurance of unemployment compensation under chapter 50.44 RCW, or industrial insurance under chapter 51.14 RCW.
This chapter is further intended to enable the board of pilotage commissioners to participate in a local government joint self-insurance program covering liability risks.
The governing body of a local government entity may individually self-insure, may join or form a self-insurance program together with other entities, including the board of pilotage commissioners, and may jointly purchase insurance or reinsurance with those other entities for property and liability risks, and health and welfare benefits only as permitted under this chapter. In addition, the entity or entities may contract for or hire personnel to provide risk management, claims, and administrative services in accordance with this chapter.
The agreement to form a joint self-insurance program shall be made under chapter 39.34 RCW and may create a separate legal or administrative entity with powers delegated thereto.
Every individual and joint self-insurance program is subject to audit by the state auditor.
If provided for in the agreement or contract established under chapter 39.34 RCW, a joint self-insurance program may, in conformance with this chapter:
Contract or otherwise provide for risk management and loss control services;
Contract or otherwise provide legal counsel for the defense of claims and other legal services;
Consult with the state insurance commissioner and the state risk manager;
Jointly purchase insurance and reinsurance coverage in such form and amount as the program's participants agree by contract;
Obligate the program's participants to pledge revenues or contribute money to secure the obligations or pay the expenses of the program, including the establishment of a reserve or fund for coverage; and
Possess any other powers and perform all other functions reasonably necessary to carry out the purposes of this chapter.
A self-insurance program formed and governed under this chapter that has decided to assume a risk of loss must have available for inspection by the state auditor a written report indicating the class of risk or risks the governing body of the entity has decided to assume.
Every joint self-insurance program governed by this chapter shall appoint the risk manager as its attorney to receive service of, and upon whom shall be served, all legal process issued against it in this state upon causes of action arising in this state.
Service upon the risk manager as attorney shall constitute service upon the program. Service upon joint insurance programs subject to chapter 30, Laws of 1991 sp. sess. can be had only by service upon the risk manager. At the time of service, the plaintiff shall pay to the risk manager a fee to be set by the risk manager, taxable as costs in the action.
With the initial filing for approval with the risk manager, each joint self-insurance program shall designate by name and address the person to whom the risk manager shall forward legal process so served upon him or her. The joint self-insurance program may change such person by filing a new designation.
The appointment of the risk manager as attorney shall be irrevocable, shall bind any successor in interest or to the assets or liabilities of the joint self-insurance program, and shall remain in effect as long as there is in force in this state any contract made by the joint self-insurance program or liabilities or duties arising therefrom.
The risk manager shall keep a record of the day and hour of service upon him or her of all legal process. A copy of the process, by registered mail with return receipt requested, shall be sent by the risk manager, to the person designated for the purpose by the joint self-insurance program in its most recent such designation filed with the risk manager. No proceedings shall be had against the joint self-insurance program, and the program shall not be required to appear, plead, or answer, until the expiration of forty days after the date of service upon the risk manager.
Public utility districts established under Title 54 RCW may form, own, or use captive insurers in accordance with chapter 48.201 RCW.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Affiliate" means an entity directly or indirectly controlling, controlled by, or under common control with another entity, such as a parent or a subsidiary corporation. "Affiliate" also means any person that holds an insured interest because that person has or had an employment or sales contract with an insured person.
"Captive owner" means one of the following:
An entity that is organized under Title 23B, 24, or 25 RCW, or analogous provisions of the law of another state or territory;
A public institution of higher education; or
A municipal corporation organized under Title 54 RCW.
"Casualty insurance" has the same meaning as "general casualty insurance" as defined in RCW 48.11.070.
"Control" means possession of the power to direct the management and policies of an entity through ownership of voting securities, by contract, or otherwise.
"Eligible captive insurer" means an insurance company with the following characteristics:
It is wholly or partially owned by a captive owner or, by contract, the captive owner is a participant or member of the insurance company;
It insures risks of the captive owner, the captive owner's other affiliates, or both;
One or more of its insureds have their principal place of business in Washington;
It has assets that exceed its liabilities by at least $1,000,000 and has the ability to pay its debts as they come due, both as verified by audited financial statements prepared by an independent certified accountant; and
It is licensed as a captive insurer by the jurisdiction in which it is domiciled.
"Property insurance" has the same meaning as in RCW 48.11.040.
"Public institution of higher education" means an institution of higher education as defined in RCW 28B.10.016.
A public utility district may be a captive owner as defined in RCW 48.201.020.