NH Supreme Court Recognizes Pooled Risk Liability Management Programs Are Not Insurance

Charles P. Bauer
Published on : 2011-09-05

The New Hampshire Supreme Court, in an order issued on September 16, 2011 in the case of Estate of Countie v. Town of Epping, et al., recognized for the first time that a pooled risk management program (PRMP) is not a policy of traditional insurance.

The significance of this judicial recognition is that municipalities that are members of PRMPs are entitled to statutory immunities and statutory limitations that are not afforded to municipalities that procure policies of traditional insurance.

The statutory immunities, defenses, and limitations conferred upon municipalities by R.S.A. 507-B, and their municipal officials, are available to municipalities that are members of PRMPs pursuant to R.S.A. 5-B. Currently, there are two PRMPs that provide liability risk protection to its members — Primex and Local Government Center. Municipalities that purchase traditional policies of insurance, and their officials, are not entitled to the immunities and limitations conferred by statute and the common law.

R.S.A. 507-B:7-a states:

“It shall be lawful for the state or any municipal subdivision thereof, including any county, city, town, school district, school administration unit, or other district, to procure the policies of insurance described in R.S.A. 412. In any action against the state or municipal subdivision thereof to enforce liability on a count of a risk so insured against, the insuring company or state or municipal subdivision thereof shall not be allowed to plead as a defense immunity from liability…”

The NH Legislature acknowledged the purpose and benefits of providing PRMPs to municipalities, and stated that PRMPs are not subject to insurance regulation and taxation by the state. In R.S.A. 5-B:1 and 3, the Legislature distinguished standard or traditional types of liability insurance, which is regulated and described in R.S.A. 412, from PRMPs, which are established, regulated, and described in R.S.A. 5-B.

In R.S.A. 5-B:6, the NH Legislature declared that Pooled Risk Management Programs are not traditional insurance companies. PRMPs, therefore, are not insurers under R.S.A. 507-B:7-a; and their municipal members are entitled to all the statutory benefits, immunities, defenses, and limitations provided by the NH Legislature and recognized by the NH Supreme Court.

* Charles Bauer and Samantha Elliott are licensed to practice in New Hampshire.