MCMJIF Bylaws - Operation of the Fund

Page 5 of 20: Operation of the Fund

4.01 GENERAL OPERATION:

A. The Fund shall be subject to and operate in compliance with the provisions of the "Local Fiscal Affairs Law" (N.J.S.A. 40A:5-1 et seq.), "Local Public Contracts Law" (N.J.S.A. 40A:11-1 et seq.) and such other rules and regulations and statutes governing the investment and expenditure of public Funds by local units.

B. The Fund shall be considered a local unit for purposes of the "Local Public Contracts Law" (N.J.S.A. 40A11-1 et seq.) and shall be governed by the provisions of that law in the purchase of any goods, materials, supplies and services.

C. The Fund shall be operated with sufficient aggregate financial strength and liquidity to assure that all obligations will be promptly met. The Fund shall prepare a financial statement on a form acceptable to the Commissioner of the Department showing the financial ability of the Fund to meet its obligations. The members may, upon majority vote, request that the Commissioner of the Department order an examination of any Fund member which the Fund, commissioners or executive committee, if any, in good faith believes may be in a financial condition detrimental to other Fund members or to the public.

D. The minimum aggregate contribution of the members for workers compensation exposure shall be at least $250,000 for the Fund's first year and at least $500,000 for each subsequent year of operation unless otherwise approved by the Commissioner. 

4.02 RISK MANAGEMENT PLAN: 

A. The Fund commissioners shall prepare or cause to be prepared a plan of risk management for the Fund. The plan shall include, but not be limited to: 

1. The perils or liability to be insured against. 
2. Limits of coverage, whether self-insurance, direct insurance purchased from a commercial carrier or reinsurance. 
3. The amount of risk to be retained by the Fund. 
4. The amount of unpaid claims to be established. 
5. The proposed method of assessing contributions to be paid by each member of the Fund. 
6. Procedures governing loss adjustment and legal fees. 
7. Coverage to be purchased from a commercial insurer, if any. 
8. Re-insurance to be purchased, if any, and the amount of premium therefore. 
9. Procedures for the closure of Fund years including the maintenance of all relevant accounting records. 
10. The assumptions and methodology used for the calculation of appropriate reserves required to be established, maintained and administered in accordance with sound actuarial principles. 
11. The maximum amount a certifying and approving officer may approve for payment pursuant to N.J.A.C. 11:15-2.22. 

B. There shall be a separate risk management plan for each of the categories which the Fund is authorized to insure and has agreed to insure (viz; Workers' Compensation, General Liability, Motor Vehicle and Equipment Liability, and Property Damage).

C. The risk management plan and all amendments must be approved by the Commissioner of the Department and the Department of Community Affairs before it takes effect. 

4.03 SERVICING ORGANIZATIONS: 

A. The Fund may contract to have the following services performed: 

1. claims administration; 
2. safety engineering; 
3. actuarial evaluation; 
4. compilation of statistics and preparation of assessments, loss and expense reports; 
5. preparation of reports required by 40A:10-36 et seq or regulations and/or rules of the New Jersey Department including N.J.A.C. 11:15-2.1 et seq.; 
6. development of members' assessments and fees. 

The Fund may arrange to have the above services performed by its own staff. 

B. No servicing organization or its producer or their employees, officers or directors shall have either a direct or indirect financial interest in the administrator or Administrative Service Organization or be an employee, officer or director of such organization, unless notice such interest has been provided to the fund commissioners and members.

C. Any servicing organization shall provide a surety bond and errors and omissions coverage in a form and amount acceptable to the Commissioner.

D. No administrator of a Fund, or administrative service organization, or its employees, officers or directors shall be an employee, officer or director of, or have either a direct or indirect financial interest in, a servicing organization of that fund, or the insurance producer that may be appointed by the Fund pursuant to N.J.A.C. 11:15-2.6(c)10, unless notice of such interest has been provided to the fund commissioners and members.

E. The Fund may at its option contract for these services from different servicing organizations, or may elect to have its own staff perform these services.

F. Any service contract shall include a clause stating "unless the Fund commissioners or executive committee otherwise permits, the servicing organization shall handle to their conclusion all claims and other obligations incurred during the contract period". 

1. The Fund commissioners shall notify the Department and the Department of Community Affairs within ten (10) days of any determination to terminate or nonrenew any agreement with a servicing organization. The notification shall include a detailed statement that sets forth the manner and method by which claims handling and other obligations performed by the servicing organization will be provided or a statement that sets forth the reasons why the Fund commissioners believe that the particular service is no longer necessary. 
2. Any employee, officer or director of an administrator, servicing organization or insurance producer that may be appointed pursuant to N.J.A.C. 11:15-2.6 ( c ) 10 shall disclose to the Fund commissioners or executive committee, as applicable, any direct or indirect financial interest such employee, officer or director has in any other administrator, servicing organization or insurance producer. 
3. All officers, employees and agents of the joint insurance fund, including the administrator and servicing organization of the Fund, on the final day of their contract or employment shall surrender and deliver to their successors all accounts, funds, property, records, books and any other material relating to their contract or employment. 

G. Any servicing organization shall provide a surety bond and errors and omissions coverage in a form and amount acceptable to the Commissioner. 

4.04 FINANCIAL STATEMENT AND REPORTS: 

A. The Fund shall provide its members with periodic reports concerning the activities and status of the Fund for the reporting period. Such reports shall be made at least quarterly and may be made more frequently at the discretion of the Fund commissioners or executive committee and shall include, but not be limited to, the minutes, the administrators report and a summation of fund activity including comments on previously reported claims and newly reported claims and other such information required by the fund commissioners.

B. A sworn annual report in a form acceptable by the Commissioner of the Department shall be prepared by the Fund, filed concurrently with the Department and the Department of Community Affairs and made available to each Fund member on or before May 1st of each year. The report shall be accompanied by: 

1. An annual audited statement of the financial condition of the Fund prepared by the auditor and performed in accordance with generally accepted accounting principles and N.J.S.A. 40A:10-46, which shall include a statement of the organization of the fund indicating the persons who perform each function for the fund and the relationship and interdependency of each function, and including its balance sheet and revenue and expense for the preceding year; 
2. Reports of outstanding liabilities showing the number of claims, amounts paid to date and current reserves for losses, claims and unearned assessments as certified by an actuary. 

C. It shall be the duty of the Fund members, commissioners, executive committee, administrator and chairman to notify the Commissioner of any information indicating that the Fund may be insolvent or in a financial condition detrimental to the Fund’s members or the public. The Fund members, commissioners or executive committee may, upon majority vote, request that the Commissioner order an examination of the Fund. 

4.05 COVERAGES: 

The Fund shall offer the types of coverage to the members which are allowed by statute and approved by the members in the resolutions which authorize membership in the Fund, but each type of coverage offered shall be separate and independent of each other.