44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO RISK MANAGEMENT; PROVIDING THAT CERTAIN STATE EDUCATIONAL INSTITUTIONS MAY ELECT TO COVER RISKS THROUGH THE PUBLIC LIABILITY FUND OR BY CERTAIN OTHER METHODS; PROVIDING FOR THE REIMBURSEMENT OF THE PUBLIC LIABILITY FUND IN CERTAIN CASES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 41-4-20 NMSA 1978 (being Laws 1978, Chapter 166, Section 3, as amended) is amended to read:

"41-4-20. COVERAGE OF RISKS--INSURANCE.--

A. It [shall be] is the duty of governmental entities to cover every risk for which immunity has been waived under the provisions of the Tort Claims Act or any liability imposed under Section 41-4-4 NMSA 1978 as follows:

(1) local public bodies shall cover every such risk or liability as follows:

(a) for a risk for which immunity has been waived pursuant to Sections 41-4-9, 41-4-10 and 41-4-12 NMSA 1978, the local public body shall cover the risk, and for any commercially uninsurable risk for which public liability fund coverage is made available, the local public body may insure the risk in accordance with the provisions of Section 41-4-25 NMSA 1978;

(b) for excess liability for damages arising under and subject to the substantive law of a jurisdiction other than New Mexico, including but not limited to other states, territories and possessions and the United States [of America], the local public body shall provide coverage in accordance with the provisions of Subsection B of Section [41-4-27] 41-4-28 NMSA 1978, if coverage is available; and

(c) for a risk or liability not covered pursuant to Subparagraphs (a) and (b) of this paragraph, the local public body shall purchase insurance, establish reserves or provide a combination of insurance and reserves or provide insurance in any other manner authorized by law; [and]

(2) for state agencies, except as provided in Paragraph (3) of this subsection, the risk management division shall insure or otherwise cover every such risk or liability in accordance with the provisions of Section 41-4-23 NMSA 1978. Coverage shall include but is not limited to coverage for all such liability arising under and subject to the substantive law of a jurisdiction other than New Mexico, including but not limited to other states, territories and possessions and the United States [of America]; and

(3) in lieu of coverage pursuant to Paragraph (2) of this subsection, the governing body of a state educational institution described in Article 12, Section 11 of the constitution of New Mexico may elect to cover every risk and liability by the purchase of insurance, the establishment of reserves or a combination of insurance and reserves; provided that, if an election is made pursuant to this paragraph:

(a) the governing body shall also negotiate with the risk management division, and employ an independent third-party mediator if necessary, to develop a plan to reimburse the public liability fund for any amount paid by the public liability fund on behalf of the institution to the extent that the liability exceeds the sum of the total premiums paid to the public liability fund by the institution plus interest earned by the public liability fund on the premiums; provided that the reimbursement plan shall be designed to avoid undue financial hardship on the institution and to preserve the financial viability of the public liability fund. If the governing body and the risk management division cannot agree on a plan, the matter shall be conducted pursuant to the provisions of the Uniform Arbitration Act; provided that the arbitration shall be conducted and decided by a single arbitrator, knowledgeable in insurance matters and selected by the chief judge of the first judicial district; and

(b) the governing body may not revoke the election and again be covered pursuant to Paragraph (2) of this subsection for a period of two years after the election is made.

B. The department of finance and administration shall not approve the budget of any governmental entity that has not budgeted an adequate amount of money to insure or otherwise cover pursuant to this section or Section 3-62-2 NMSA 1978 every risk of the governmental entity for which immunity has been waived under the provisions of the Tort Claims Act or liability imposed under Section 41-4-4 NMSA 1978. The [public school finance division of the department of finance and administration] state department of public education shall not approve the budget of any school district [which] that has failed to budget sufficient revenues to insure or otherwise cover pursuant to this section every risk for which immunity has been waived pursuant to the provisions of the Tort Claims Act or liability imposed under Section

41-4-4 NMSA 1978.

C. No liability insurance may be purchased by any governmental entity other than as authorized by the Tort Claims Act."