Res 1408 - CIS Agrmt Prop Ins
COUNCIL BILL NO. 1787
RESOLUTION NO. 1408
A RESOLUTION ENTERING INTO A CONTRACT WITH CITY/COUNTY INSURANCE
SERVICES TRUST FOR PROPERTY INSURANCE.
WHEREAS, the City/County Insurance Services Trust (CIS)
offers pooled self-insurance offering cost stability and the
potential for long-term savings, and
WHEREAS, CIS is sponsored by the League of Oregon Cities
and the Association of Oregon Counties as a service to Oregon
cities and counties, and
WHEREAS, the City of woodburn finds that membership in
CIS is of benefit in managing the risks involved in providing
services to its citizens, and
WHEREAS, the City of Woodburn has been provided with an
opportunity to review the Trust Agreement, Bylaws, and Rules of
CIS, and
WHEREAS,
Agreement, Bylaws,
compliance with the
now, therefore,
the City of Woodburn has submitted the Trust
and Rules to its legal counsel to review for
Charter and Ordinances of the City of Woodburn,
THE CITY OF WOODBURN RESOLVES AS FOLLOWS:
Section 1. That the City of Woodburn does hereby enter
into a contract with CIS and becomes a member of the CIS Trust for
Property for the period of March 17, 1997 to March 16, 2000 and
agrees to abide by the terms of the Trust Agreement, Bylaws, and
Rules of CIS which, along with this Resolution, constitutes the
contract between the City of Woodburn and CIS. A copy of said
contract is attached hereto and by this reference incorporated
herein. The City Administrator is hereby authorized to execute
such documents as are necessary pursuant to this Resolution.
Approved as to Form:
City
Passed by the Council
Submitted to the Mayor
Approved by the Mayor
Filed in the Office of the Recorder
ATTEST_f\\~ l~
Mary nnant, Recorder
City of Woodburn, Oregon
Attorney ~
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APPR ED . u ~
~ NANCY A. KI Y , MAY~' '/1,-LS'ot.,.+
Apri 1 14, 1997
April 17,1997
Ap r i 1 17, 1997
April 17, 1997
Page 1 - COUNCIL BILL NO. 1787
RESOLUTION NO. 1408
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CITY/COUNTY INSURANCE SERVICES
DECLARATION AND AGREEMENT OF TRUST
THIS DECLARATION AND AGREEMENT amending the CITY/COUNTY INSURANCE
SERVICES TRUST ("CIS Trust").AGREEMENT of April 16, 1993, is made this 18th day of
November, 1994, by and between the LEAGUE OF OREGON' CITIES, ("League") and the
ASSOCIATION OF OREGON COUNTIES ("Association"), acting through their respective
Boards of Directors. This DECLARATION AND AGREEMENT also contains Amendments
of the League of Oregon Cities Employee Benefit Services Trust ("EBS Trust.:}Agreement, by
the Board of Directors of the League, and the Amendments of the Association of Oregon
Counties Insurance Trust ("AOCIT") Agreement, by the Board of Directors of the Association.
The. principal purpose of this DECLARATION AND AGREEMENT is to consolidate
administration of .the EBS Trust, the AOCIT, and the CIS Trust in the Board of Trustees of the
CIS Trust to accomplish the further objectives set forth in the following Recitals:
RECITALS
I. The LEAGUE is ~ intergovernmental entity established pursuant to Oregon Revised.
Statutes Chapter 190 to perform governmental purposes and functions, to promote the common
interests of its member cities and to institute programs to assist those members in performing
their proper functions at the least cost to their taxpayers.
The ASSOCIATION is an organization for intergovenimental cooperation created by its member
counties pursuant to ORS 190.010 to ORS 190.110 and established in 1912 to promote the
common interests of its member counties and to institute programs to assist those members in
performing their proper functions at the least cost to their taxpayers.
II. In furtherance of those objectives, the LEAGUE and the ASSOCIATION, for the benefit
of their respective members, desire to:
A.
Continue and improve the CIS Trust program whereby the risks incurred by their
member governments in the areas of tort liability, property loss, and workers'
compensation may be effectively and economically managed, and whereby
insurance and self-insured retention of such risks may be most'responsibly and
economically funded.
B.
1. Continue to provide and improve the EBS Trust programs and the AOCIT
programs to which contributions from participating employers and contributions,
if any, from participating employees can be paid and through which the Trustees
can create and administer health and welfare benefit plans, including (a) life,
dependent life, accidental death and dismemberment insurance; (b) health
benefits; and (c) disability benefits for nonoccupational illness or injury,
according to sound actuarial and underwriting principles.
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2 To provide employees of Participating Employers, and dependents of
employees. covered by the Trust plans with insurance and other benefits in the
amount and coverage determined by the Board of Trustees. The cost of
dependent coverage shall be paid by the employees using the coverage; unless,
at the discretion of the Participating Employer, a portion or all of the employer
contribution is allocated to pay for dependent coverage.
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III. A purpose of this Agreement, therefore, is to consolidate. administration of three trusts
in order to protect and manage insurance premiums, contributions, and other collections related
to the trust programs; oversee the management and administration of the trust programs; and
approve the necessary contracts, ,insurance policies, premium and fee sch$les, and other
arrangements necessary to implement programs for the benefit of those member governments
of the LEAGUE and the ASSOCIA nON who choose to participate.
IV.' IN CONSIDERATION of the benefits to be derived for their respective members, and
the mutual covenants and conditions herein contained; the LEAGUE and the ASSOCIATION
declare and agree as follows: .
ARTICLE 1. DEFINITIONS
For the purposes of the consolidated or combined administration of the CIS Trust, the .
EBS Trust, and the AOCIT, the definitions of the EBS Trust Agreement, as restated October.
14, 1988. and of the AOCIT Agreement. revised and adopted June 14, 1993, shall apply unless (
the context clearly indicates otherwise, and "Board of Trustees" or ."Trustees" means the CIS
Board of Trustees, designated under Article 2.4 to administer the trust plans of the CIS Trust,
the EBS Trust, and the AOCIT.
ARTICLE 2. AMENDMENTS. OF TRUSTS AND DESIGNATION OF BOARD OF
TRUSTEES.
2.1 Effective January 1, 1995, The LEAGUE and the ASSOCIATION hereby consolidate
for administrative purposes the three trusts - previously designated as the CIS Trust, the EBS
Trost, and the AOCIT, respectively - in the CITY -COUNTY INSURANCE SERVICES TRUST
(hereinafter referred to as "The TRUST").
2.2 Effective January 2, 1995, The LEAGUE designates the TRUST'S Board of Trustees as
the successor of the EBS Trust's Board of Trustees, and directs that the TRUST shall be the
successor to the League of Oregon Cities Employee Benefits Services Trust.
2.3 Effective January 2, 1995, The ASSOCIATION designates the TRUST'S Board of
Trustees as the successor to the AOCIT Board of Trustees, and directs that the TRUST shall be
the successor to the AOCIT.
2A The TRUST shall be governed by a Board of Trustees composed of ten Trustees. Four
Trustees shall be appointed by the Board of Directors of the LEAGUE and four shall be
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appointed by the Board of Directors or the ASSOCIATION. The Executive Directors of the
LEAGUE and the ASSOCIATION shall serve as Trustees. The LEAGUE and the
ASSOCIA TION, with respect to the Trustees appointed by each, shall adopt their own rules and
procedures for the appointment, tenJ,Jre, and removal of Trustees, subject to the following
minimum standards:
2.4.1 If Trustees are appointed for a fixed term, terms shall be for no less than one
year, and shall be staggered so that no more than one LEAGUE-appointed Trustee's
term, and no more than one ASSOCIATION-appointed Trustee's term expires during any
calendar year_
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2.4.2 As a qualification for appointment and continued service, each appointed Trustee,.
shall be an elected or appointed official of a city. or county which is a member of the'
LEAGUE or ASSOCIATION appointing the Trustee and' which is a participant in one
or more coverages offered by the TRUST.
2.4.3 In order to insure the faithful, independent, and impartial exercise of judgment
and discharge of their obligations, Trustees shall, during their term of office; be subject
to removal only for just cause.
2.4.4 No Trustee shall serve, and no appointment shall be .effective, until such
appointee acknowledges in writing full and unconditional acceptance of the terms of this
Declaration and Agreement.
2.5 In the event of a Trustee's resignation, inability (including disqualification under'
Paragraph 2.4.2 hereof), removal, or refusal to act~ a successor Trustee' shall be appointed as
provided in Article 2.6 hereof.
2.5.1 If the Trustee being replaced was serving a fixed term, the successor Trustee
shall be appointed to serve the remainder of the unexpired term.
2.5.2 In the event that a Trustee shall cease to be qualified under paragraph 2.4.2
hereof as an elected or appointed official, such Trustee may continue to serve for a
period of 90 days or until appointment of a successor, whichever shall come first.
2.5.3 In the event that a Trustee shall cease to be qualified under 2.4.2 hereof as an
elected or appointed official of a participant in one or more coverages offered by the
TRUST, such Trustee may continue to serve for a period of one year, or until
appointment of a successor, whichever shall come first.
2.5.4 If a Trustee, within the times set forth in 2.5.2 or 2.5.3 above, shall again be
qualified to serve, then such Trustee shall continue to serve as if such period of
disqualification had not occurred.
2.6 Should a vacancy exist among the Trustees, the remaining Trustees shall have
full power to act as the Board of Trustees.
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2.7 Trustees, officers and agents of the TRUST shall use ordinary care and
reasonable diligence in the exercise of their powers and in the performance of their ('
duties. They shall not be liable for anTmistakes of judgment or other action made, taken
or omitted by them in good faith, nor for any action taken or omitted by any agent,
employee or independent contractor selected with reasonable care, nor for loss incurred
through investment of funds or failure'to invest. No Trustee shall be liable for any
action taken or omitted by any other Trustee. No Trustee shall be required to give a
, bond or other security to guarantee the faithful performance of their duties hereunder.
To the extent permitted by law, the TRUST shall indemnify, defend and hold harmless
any Trustee, officer or agent of the TRUST for actions taken by the Board of Trustees
or performed by such Trustee, officer or agent within the scope of Itij; duties for the
TRUST. The TRUST may purchase insurance providing similar coverage for such
Trustees, officers or agents. . From the TRUST assets, the Board of Trustees may
indemnify a Trustee against any and all claims, losses, damages, expenses and liabilities
arising from under any act of commission or omission on behalf of the TRUST unless
the act is determined, by either a court or neutral party, to be a breach of fiduciary
responsibility by the Trustee. The indemnification shall include-reasonable attorney's
fees and all other costs and expenses reasonably incurred by the - Trustee in defense of
any action brought against the Trustee arising from.the act of commission or omission.
ARTICLE 3. PURPOSES OF TRUST.
3.1 The express purposes and primary objectives of the TRUST are stated above and in the
CIS Trust Agreement as amended April 16, 1993; in the EBS Trust Agreement, . as- restated
October 14, 1988; and in the AOCIT Agreement, revised and adopted June 14, 1993.
3.2 The foregoing expression of purposes is not exhaustive, and in addition to other related
objectives reasonably inferred from that list, the TRUST shall have such other objectives as may
be lawful for an intergovernmental association under Oregon law.
ARTICLE 4. POWERS, DUTIES, AND FUNCTIONS OF BOARD OF TRUSTEES.
4.1 In furtherance of the purposes set forth above, theTRUST'S Board of Trustees shall have
the following powers and duties:'
4.1.1 To interpret and construe the provisions of the Trust Plans; decide any disputes
which may arise relative to the rights of employees, past and present, and beneficiaries,
under the terms of the Trust Plans; determine, increase, decrease, or terminate, in whole
or in part, the benefits and coverage provided by the Trust Plans; select the carriers
providing the benefits and to exercise all rights granted to a policy holder; and establish
or modify rules of eligibility for benefits and employer participation.
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4.1.2 To authorize payment of benefits to which a Beneficiary is entitled under the
Trust Plans (a) to providers if assignment is made by beneficiaries; (b) to a Beneficiary;
(c) to any person having custody of a Beneficiary; (d) to the legal guardian of the
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properly of a Ikndiciary, or (e) to any person who, or corporation which, shall be
furnishing maintenance, support or hospitalization to a Beneficiary_ The receipt of such
person or corporation to whom, or to which, the disbursements arc made shall be a
sufficient release for the Board of Trustees and the recipient shall not be required to
account to. the Board of Trustees, to any court, or to any other person for the disposition
of the proceeds.
4.1.3 To engage in and oversee, as the Board of Trustees deems appropriate, the
services of competent insurance agents and brokers to negotiate on behalf of the TRUST.
with insurance underwriters, and to market coverage and services to prospective
participants in the TRUST's services. <.~
4.1.4 To engage and oversee, as.the Board of Trustees deems appropriate, the services
of competent professionals to manage or assist in the management of the collection,
investment, and disbursement of TRUST funds.
4.1.5 To engage and oversee the services of competent administrators and other staff
to provide risk management and insurance related services to the TRUST and its
participants, including such claims reporting and adjusting, record keeping, information
sharing, loss control and prevention consulting, and such related administrative and
consulting services as the Board of Trustees deems appropriate.
4.1.6 To review and approve policy forms, service contract forms, and other
documents appropriate to the operation of the TRUST, and to establish the limits of
authority of the persons engaged under Paragraphs 4.1.3, 4.1.4, and 4.1.5.
4.1.7 To establish methods of calculating premiums for insurance coverages offered,
and other service fees to be charged to participants in the TRUST's services; and to
establish procedures for the collection, investment, and disbursement of moneys owed
to and by the TRUST, and actions to be taken with respect to delinquent accounts
receivable.
4.1.8 To establish and maintain, from contributions and other assets of the TRUST,
reserves necessary according to sound actuarial and underwriting principles to provide
stability and security to the TRUST's programs.
4. 1. 9 To provide for complete accounting, and at least annually, audit of the funds
received, invested, kept and disbursed by the TRUST; and to establish such accounts
with financial and investment institutions and brokerages as may be necessary and
prudent for the proper management of TRUST funds. All such funds of the TRUST may
be aggregated for purposes of deposit, investment and disbursement. However, records
of moneys received and disbursed shall also be maintained by classes of local
governments participating in each of the separate programs and services of the TRUST.
Funds from each separate program of tile TRUST shall not be commingled but shall be
held and lIsed exclusively for the benefit of participants of each separate program. This
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shall not prcclude paymcnt for shared administrative costs in such proportions as the
Board of Trustees, in its discretion, may determinc. (
4.1.10 To acquirc and retain'evcry kind of property, real, personal or mixed, and every
kind of investment, spccifically including, but not by way of limitation, bonds,
debentures, and other corporate or government obligations, interests in common trust
funds, and securities of any open-end or closed-end management type investment
company or investment trust, provided that in the making of investments the Trustees
. shall comply with the investment limitations of applicable law, and shall diversify
investments so as to minimize the risk of large losses, unless under the circumstances it
is clearly prudent not to do so. '-~
4.1.11 To hold title to all investments or other assets of.the TRUSTin the name of the
TRUST, provided that for convenience in transferring bonds, or other negotiable
securities, title to the securities may be held in the name of the TRUST's custodian bank,.
or of its nominee. Except as may be authorized by applicable laws, the indicia of
ownership of all investments and other assets of the TRUST shalf be maintained within
the jurisdiction of the federal district courts of Jhe United States.
4.1.12 To maintain accurate records and accounts of all transactions, which shall be
available at all reasonable times for inspection by participating Employers or
Beneficiaries. The account shall contain the book and market value of .the Trust Plans'
assets and additional information which the Board of Trustees deems necessary to
complete all disclosure and reporting requirements to all governmental agencies or . (
Beneficiaries. The Board of Trustees may determine the market value of the Trust Plans'.
assets from sources it deems reliable, including but not limited to, information reported
in newspapers, [mancial publications or the records of security exchanges or brokerage
firms.
4.1.13 To contract with the LEAGUE and the ASSOCIATION for the services of staff
members and for such support services and facilities as the Board of Trustees shall
consider appropriate. The Board of Trustees may pay for such services and facilities out
of TRUST funds.
4.1.14 To contract with the LEAGUE and the ASSOCIATION for compensation of
their support in marketing the products and services of the TRUST, including but not
limited to use of the names and goodwill of the LEAGUE and the ASSOCIATION. The
Board of Trustees may pay such compensation out of TRUST funds to the extent
permitted by applicable law and prudent under pertinent tax laws.
4.1.15 To establish such advisory committees as the Board of Trustees deems advisable
to assist in policy and operations of the TRUST; and to appoint qualified persons to such
committees to serve at the pleasure of the Board of Trustees.
4.1.16 To promulgate bylaws and regulations for the operation of the Board of Trustees
and the TRUST consistent with the provisions of this Declaration and Agreement.
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4.1.17 To exercise sllch other powers and to prepare and execute sllch other documents
and agreements, as may be lawful and necessary to implement more fully this
Declaration and Agreement.
4.1.18 The Board of Trustees shall require all persons performing services to the
TRUST under the above provisions to be bonded or insured in a form and amount set by
the Board of Trustees. '
4.2 The Board of Trustees shall be chaired by one of the appointed members chosen in
accordance with the Board of Trustees' bylaws, and, in the absence of-the chair, by a vice-chair.
chosen in accordance with the bylaws; provided, however, that the chair an~..lvice-chair shall
alternate annually between appointees of the LEAGUE and the ASSOCIATIuN so that'each
body is represented by an appointee holding one office or the other in any year,' and the
following year the representation is' reversed. .
4.3 The Board of Trustees shall hold an annual meeting between January 1 and June 15 of
each year, and shall meet at such other times as may be necessary with the concurrence .of any
six Trustees or upon call of the chair. At the request of the LEAGUE or the ASSOCIATION,
the Board of Trustees shall meet with Boards of Directors of the LEAGUE or the.
ASSOCIATION, jointly or separately, at least annually.
4.4 Seven Trustees shall constitute a quorum; provided, however, that if there are three or.
more vacancies in Trusteeships, the remaining Trustees shall constitute a quorum and shall have
full power to transact business and act for the TRUST.
4.5' All TRUST action shall require affirmative votes of a majority of Trustees constituting
a quorum.
4.6 The chair or vice-chair of the Board' of Trustees shall execute on behalf of the TRUST
all contracts, documents, and pleadings as may be approved by the Board of Trustees; provided
that the Board of Trustees may delegate to any person or fIrm engaged pursuant to Paragraphs
4.1.3, 4.1.4, or 4.1.5, 4.1.13 a limited agency authority to bind the TRUST in certain cases or
kinds of transactions to be specifIed by the Board of Trustees.
ARTICLE 5. USE OF TRUST FUNDS.
5.1 Without further specific action of the Board of Trustees, but subject to any limitations
or conditions set by the Board of Trustees in its bylaws or regulations, the administrators
designated by the Board of Trustees shall disburse or authorize disbursement of moneys from
funds of the TRUST for any of the following purposes:
5.1.1 Payment of moneys due and certain under or by virtue of any contract, bond,
or policy of insurance made or obtained by or on behalf of the TRUST, or pursuant to
any pooled self-insured retention fund established in accordance with Article 2.1.5 of the
CIS Trust Agreement of April 16, 1993-, including the costs of audits pursuant to Article
5.3;
S 12 IllVl;SIIl1l;1l1 <llld rl;invl;slll1l;1l1 or TRUST funds under such standards and
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limitations as may be approved by the Board of Trustees;
5.1.3 Payment of premiums due on fidelity, performance, errors and omissions, or (
other bonds and insurance which the Board of Trustees may require in its bylaws to
protect the TRUST and the Trustees;
5.1.4 Reasonable and necessary expenses incurred by Trustees for such items as travel,
meals, lodging, telephone calls, and other out-of-pocket expenses incurred in performing
their duties as Trustees; provided that the personal services and time devoted by Trustees
shall not be compensated by TRUST funds.
5.2 Except as provided in Article 5.1, or as authorized in a budget duly adopted by the Board
of Trustees, TRUST funds shall not be disbursed, expended, or indebted without express
approval of the Board of Trustees. Such approval may be solicited from each Trustee in writing
without necessity for a meeting of the Board of Trustees.
5.3 The Board of Trustees. shall provide for an annual audit of TRUST-funds and operations,
and for such interim audits as it deems necessary. Copies of such.audits shall be furnished to
each Trustee, and to the 'LEAGUE and the ASSOCIATION. The cost of such audits shall be .
paid out of TRUST funds.
5.4 The Board of Trustees'shaU, in the process of considering and adopting the. annual budget
of the TRUST, solicit the advice of the LEAGUE and the ASSOCIATION regarding services
required by their respective members.
5.5 Income from investments of the TRUST in excess of obligations payable under this Article
may, at the direction of the Board of Trustees, be distributed in whole or in part, from time to
time, to local government participants in the program, either directly or by way of reduction of
premiums, contributions, or other fees assessed to participants. Such distributions shall be based
upon such formula as the TRUST shall approve which includes both losses incurred and
proportionate premiums, contributions, and fees paid by individual local governments
participating in the program during the period since the last distribution,. if . any . Except as.
provided in this section, investment income shall remain with the TRUST for reinvestment or
satisfaction of the obligations of the TRUST as provided in Articles 5.1 through 5.3.
ARTICLE 6. ELIGIBILITY FOR PARTICIPATION AND TERMINATION.
6.1 Subject to the bylaws and regulations adopted by the Board of Trustees, each city and
county in the State of Oregon which is a member of either the LEAGUE or the ASSOCIATION
shall be eligible to participate in the coverage, programs and services offered by or through the
TRUST.
6.2 A city's or county's participation may_ be terminated or not renewed by the Board of
Trustees in the event it ceases to be qualified under Article 6.1, subject to any vested rights, not
otherwise subject to termination for cause, which the city or county may have acquired in such
participatioll.
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().3 As lIsed in Articles 6.1 and 6.2, "city" and "county" include districls, agencies, and
instrumentalities which are "public bodies" as defined in ORS 30.260, and which are created by
a cily or county under statutory or home rule charter authority. Such districts, agencies, and
instrumentalities, though separate legal entities, are entitled under this Declaration and
Agreement to separate participation i.n the TRUST.
6.4 Subject to the bylaws and regulations a~opted by the Board of Trustees, and provisions
of the CIS Trust Agreement, as amended April 16, 1993, districts, agencies and instrumentalities
which are "public bodies" as defined in ORS 30.260 (4) (b) and (c), though separate legal
entities, are entitled under this Declaration and Agreement to separate participation in the
TRUST.
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6.5 An eligible Employer shall become a Participating Employer upon approval of the Board
of Trustees, in its discretion, and execution of a participation agreement in a form required by
the Board of Trustees.
6.6 The Trust Plans shall be available to all eligible current, terminated or retired employees
or otherwise legally designated recipients of benefits entitled to coverage thfough a Participating
Employer. Eligibility shall be determined by the Participating Employer in accordance with and
subject to TRUST administrative rules.
6.7 An employer shall cease to be a Participating Employer whenever it:
A. Ceases to be a Participating Employer as dermed in Article 2.10 of the EBS
Trust Agreement as' restated October 14, 1988, and Article 2.10 of the AOCIT
Agreement, revised and adopted June 14, 1993.
B. Becomes delinquent or otherwise fails to comply with the terms of this Trust
Agreement or the Bylaws or rules of the TRUST and has received 30 days' written notice
of termination; or
C. Delivers to the Board of Trustees written notice of its intention to terminate
participation in the TRUST. Such notice shall be given not less than 30 days prior to the
proposed date of termination.
6.8 The TRUST shall not be responsible for the payment of premiums for Participating
Employer, or for other Beneficiary coverage, unless the payment shall be received by the
TRUST. The TRUST shall not be liable for the payment of claims in case the carrier refuses
to accept the premiums.
ARTICLE 7. INTEREST IN TRUST PLANS' ASSETS AND SPENDTHRIFT
PROVISIONS.
7.1 A Participating Employee, Participating-Employer, Beneficiary, a party to the Trust Plans
or any other person or entity shall not have any right, title, or interest in the Trust Plans' assets.
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1.2 ^ Participaling Employee or Beneficiary shall nol have a righl 10 assign any benefits
provided by the Trust Plans except to a Beneficiary or to a provider of medical or hospital ('
services, The benefits provided by the Trust Plans shall not be subject to seizure by legal
process or be in any way subject to .the claims of creditors of a Participating Employee or
Beneficiary except for an authorized assignment to a provider of medical or' hospital services.
ARTICLE 8. DISPUTES NOT SUBJECT TO COLLECTIVE BARGAINING.
8.1 The TRUST, the Trust Plans, any insurance contract issued in connection with the Trust
Plans or any claim for benefits shall not be subject to the grievance procedure ~~ the arbitration
provisions of any collective bargaining agreement between a Participating Employer ,and a union
representing the Participating Employees.
ARTICLE 9. DISSOLUTION OR TERMINATION OF TRUST.
9.1 This TRUST may be voluntarily dissolved upon declaration of the LEAGUE, acting
through its Board of Directors, or the ASSOCIATION, acting through its Board of Directors.
Such declaration of dissolution shall not become effective until delivered, in writing, to each
Trustee, and to the chief administrative officer or governing body of each participating city,
county, and other public body, and then not until the happening of either of the following:
9.1.1 Expiration or termination of every policy, contract, or other agreement under
which any city or county participates in the services or programs offered by the Trust,
or is indemnified or insured by or through the TRUST; or
9. 1. 2 The adoption and approval of a distribution plan pursuant to paragraph 9.3.
9.2 This TRUST shall automatically terminate and dissolve upon the first occurrence of any
of the following:
9.2.1 The date after January 1, 1995, on which there are no members of the LEAGUE
or ASSOCIATION then participating in the services offered by or indemnified or insured
by or through the TRUST;
9.2.2 The date on which all cities and counties then participating in the TRUST cease
to be members of the LEAGUE or the ASSOCIATION; or
9.2.3 Upon the dissolution, adjudication of bankruptcy, or appointment of a receiver
for either the LEAGUE or the ASSOCIATION.
9.3 Upon dissolution or termination of the TRUST:
A The balance, if any, of assels arising from property/casualty programs of the
TIZlJST n.:maining after salisfaclion of all obligations of the TIHJST shall be distributed
;tCUlldill!', to;\ pL\l1 turll1l:lillg till: p\lrposes of Ihis TIUIST ;\1\(1 adopted hy the Board of
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or
Trustees with the approval or the LEAGUE and lhe ASSOCIATION. In the event such
a plan is nOI approved within 180 days or such lermination or dissolution such remaining
assets shall be distributed among those local governments who were participants in the
TRUST at any time during the 12 months immediately preceding dissolution or
termination, in proportion to 'their individual actual payments made to the TRUST of
premiums, contributions, and fees during that 12 month period.
B. The balance, if any, of'assets arising from health and welfare benefits programs
of the TRUST remaining after satisfaction of all obligations' of the TRUST shall be
applied to purchase or provision of benefits which the Board of Trustees may determine
for Employers who' are Participating Employers on the date of tefll.\ination, or for
individuals who are Participating Employees or Beneficiaries on the date of termination.
The Trust Plans' assets shall not revert to, or be used for, the Trustees of the Board of
Trustees or the LEAGUE or the ASSOCIATION.
9.4 . Automatic termination as provided in Article 9.2 shall not affect the rights of any
participating local government under any "policy" of "insurance" undelWritten by an "insurer"
other. than the TRUST, as the terms "policy", "insurance", and "insurer" are defined in the
Oregon Insurance Code,
9.5 The Board of Trustees shall continue to act for the purpose of dissolution and the
execution of all instruments which may be required to dissolve and liquidate the Trust Plans or
TRUST.
ARTICLE 10. AMENDMENTS.
10, 1 This Declaration and Agreement may be amended from time to time by mutual written
agreement of the LEAGUE and the ASSOCIATION acting through their respective Boards of
Directors; provided that the LEAGUE and the ASSOCIATION deliver to each Trustee a full
copy of the proposed amendment at. least ten days prior to taking any action approving the
amendment, and consider any written or oral comments by the Trustees either individually or
as a Board of Trustees prior to such action.
10.2 No amendment shall operate to the prejudice of any vested rights held by any participant
in a program under a policy, contract, or other document for the benefit of such participants.
10.3 The Trust shall not be amended in any manner inconsistent with the legal requirements
applicable to the TRUST to permit the TRUST's assets, or any part thereof to revert, or be
diverted, to the benefit of any employee or any person other than the Participating Employers,
Participating Employees or Beneficiaries to the extent contributions were made for the benefit
of the Participating Employees or Beneficiaries. An amendment, by its terms, may be
retroacti ve.
11
......,
<I
..
ARTICLE II. SEVERABILITY.
If any provision of this Declaration and Agreement is adjudicated to be invalid, unenforceable, (
or unconstitutional, the remainder of the provisions not subject to such adjudication shall not be
affected and shall continue in full force and effect.
IN WITNESS WHEREOF, the LEAGUE and the ASSOCIATION have approved the foregoing
amendments on the 18th day of November, 1994.
'-~
ASSOCIATION OF OREGON COUNTIES
~.
President
// ~~.'~
6<~~ . . ~-
Executive Director
LEAGUE OF OREGON CITIES
Ii ~9L5))--
President
7?~~ t. ~~
Executive Director
12
-"TO
APPENDIX
CITY/COUNTY INSURANCE SERVICES
TRUST AGRI~EMENT OF NOVEMBER 18, 1994
DEFINITIONS
The amended joint Trust Agreement adopted November 18, 1994 refer~9ces definitions
contained in the EBS Trust Agreement, as restated October 14, 1988, and in the AOCIT
Trust Agreement, as revised and adopted June 14,1993. For convenience, those definitions
are restated in this Appendix. Unless otherwise noted, the definitions are identical.
2.1 "Administrator" means the person or business entity contracted with or
appointed by the Board of Trustees to supervise the administration of the Trust Plan under
control of the Board of Trustees.
2.2 "Beneficiary" means an employee, a dependent thereof, or a retiree, or a
dependent thereof, of a Participating Employer, or otherwise legally designated recipient
of benefits, who is, or shall be, entitled to receive benefits from the Trust Plan; or a spouse
or a dependent of an employee or a retiree of a Participating Employer who is, or shall be,
entitled to receive benefits from the Trust Plan.
2.3 "Dependent" means a dependent as defined in any policy or other form of
coverage selected by the Board of Trustees.
2.4 [EBS] "Board of Trustees" means the Employee Benefits Services Board of
Trustees established and designated under Article IV to administer this Trust Plan.
2.4 [AOCIT] "Board of Trustees" means the Association of Oregon Counties Board
of Trustees established and designated under Article IV to administer the Trust Plan.
2.5 "Carrier" means any commercial insurance company, health maintenance
organization or health care service contractor organization issuing a contract under the
terms of which benefits are provided by the Trust Plan and may include the Trust Plan itself
if the Trust Plan is a self-insurer.
2.6
[EBS] "Effective Date" of this restated Trust Plan shaIl be October 14, 1988.
2.6
1993.
[AOCIT] "Effective Date" of this restated Trust Agreement shall by July 1,
2.7 (EBS] "Employer" means any city, municipality, public agency. public
corporation, special servicc district, govelflmcnlal agcncy or governmcntalunit wilhin the
Sl;llc or Oregon.
1\ I
Tb
2.7 IAOCITI "hllploycr" mcans any county, public agcncy, public corporation,
spccial sClvicc district, govcrnmcntal agcncy or governmcntal unit with thc St<ltc of Oregon.
2.8 [EnSj "League" means the Leagl~e of Oregon Cities.
2.8 [AOCIT) "Association" means the Association of Oregon Counties.
2.9 [EBS) "Participating Employee" means an employee of a Participl\ting Employer
on whose behalf contributions are made to the Trust Plan.
'..:>'
2.9 [AOCIT) "Participating Employee" means an elected officil\l or employee of a
Participating Employer on whose behalf contributions are made to the Trust Plan. .
2.10 "Participating Employer" means an Employer which has qualified and agreed
to participate in this Trust Plan pursuant to Article III and the eligible employees of which
are entitled to coverage under the Trust Plan.
2.11 [EBS) "Trust Plan" means the health and welfare Plans of the League of Oregon
Cities Employee Benefits Services Trust.
2.11 [AOCIT) "Trust Plan" means the health and welfare benefit plans of the
Association of Oregon Counties Insurance Trust.
2.12 [EBS) "Employee Benefits Services Trust" means the Trust for the Trust Plan.
2.12 [AOCIT] "Trust" means the entity established by the Association of Oregon
Counties.
2.13 [AOCIT only) "Trust Agreement" means the document estl\blishing the Trust.
2.14 [AOCIT] and 2.13 [EBS] "Plan Yel\r" means the period of time from August
1 to July 31.
2.15 [AOCIT] and 2.14 [EBS] "Policy" means an insurance policy or any contract
issued pursuant to the Trust Plan under which benefits are provided to a Participating
Employee or a Beneficiary.
PUR POSES
The amended joint Trust Agreement adopted November 18, 1994 also references the
objectives of the EBS and AOCIT Trust Agreements and the purposes of the CIS Trust
Agreement, as amended ^priI16, 1993. For convenience, thosc objectives and purposes are
restatcd in this Appcndix. Unless othclWise noted, thc EBS and AOCIT objcctives are
idclltic;d
A2
... 'Y'" ..,.--.. I'
EBS and AOCIT
1.1 GENERAL OBJECTIVE. To provide an entity to which contributions from
Participating Employers and contributions from Participating Employees (if any) can be paid
and through which the Trustees can create arid administer health and welfare benefit plans
according to sound actuarial and underwriting principles.
1.2 WELFARE BENEFIT PLANS FOR COVERED EMPLOYEES. To provide
employees of Participating Employers with insurance and other benefits in,tIJe amount and
coverage detennined by the Board of Trustees. The benefits may i.iclude (a) life,
dependent life, accidental death and dismemberment insurance; (b) health and dental
benefits; and [EBS] (c) disability benefits for non-occupational illness or injury [AOCIT] (c)
disability benefits.
1.3 BENEFITS FOR DEPENDENTS. To make benefits available to dependents
of employees covered by the Trust Plan. The cost of dependent coverage shaH be paid by
the employees using the coverage; however, in the discretion of the Participating Employer,
a portion of the employer contribution may be allocated to pay for dependent coverage.
1.4 RESER YES. To establish and main tain reserves reasonab ly requ ired to provide
security and stability to the Trust Plan.
(
CIS
2.1 The express purposes and primary objectives of the TRUST are:
2.1.1 To insure that there is available to LEAGUE and ASSOCIATION
members a market for liability, property, and workers' compensation insurance
coverage appropriate to the risks to which such members are exposed;
2.1.2 To aggregate the collective buying power of those LEAGUE and
ASSOCIATION members, and the economic advantages of individual and
pooled risk retention where lawful and actuarialIy sound, to reduce and
stabilize the cost of funding those risks;
2.1.3 To make available to LEAGUE and ASSOCIATION members a
resource of expertise in the management of risk through loss prevention and
loss control programs, claims management and consulting, data gathering,
information sharing, and related services.
2.1.4 To act as an information resource to members and to the LEAGUE and
the ASSOCIATION in preseTlting to appropriate legislative bodies and
committee data related to the cost of public body risk in Oregon;
^l
yo
2.1.5 To act, upon such joint authorization as the LEAGUE and the (
ASSOCIATION may hereafter grant, as a pooled self-insured retention fund
for participating members of the LEAGUE and ASSOCIATION, and such
other local governments whose participation may be approved by the LEAGUE
and ASSOCIATION, and to establish actuarialIy sound contribution schedules
for participants in such a pool at appropriate retention levels;
2.1.6 To receive, account for, invest, and disburse as lawfully due and payable
moneys collected from participating cities, counties and other local governments
as premiums, fees, and other contributions to the TRUST. '-'
2.2 The foregoing expression of purposes is not exhaustive, and in addition to other
related objectives reasonably inferred from that list, the TRUST shall have such other
objectives as may be lawful for an intergovernmental association under Oregon law.
(
^'l
~H
""'~----'<~--'~~---'--r----~--~---' <<~"'-"-" ,---,,,-
CI1Y/COUNTY INSURANCE SERVICES
',.~
BYLA WS
)
I
March 1988
)
T' . .
Article 1
Definitions
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
CIIT/COUNIT INSURANCE SERVICES
BYLAWS
Table of Contents
Page
Administrator ......................................... 1
Administration ......................................... 1
Association of Oregon Counties .................. .':'~ . . . . . .. 1
Bylaws .............................................. 1
Contribution .......................................... 1
Fund Year ........................................... 1
Governing Body ........................................ 2
Insurer ..................................,........... 2
League of Oregon Cities ................................. 2
Loss Fund ............................................ 2
Member ............................................. 2
Net Income ........................................... 2
Official .............................................. 2
Participant .................................. . . . . . . . . ., 2
Premium ............................................. 2
Risk Management Programs/Loss Prevention Programs ........... 2
Rules ............................................... 3
SelVice Company ....................................... 3
Trust ................................................ 3
Trust Agreement ....................................... 3
Trustee .............................................. 3
Trustees or Board of Trustees ............................. 3
Article 2
Membership and Participation
2.1
2.2
2.3
2.4
2.5
2.6
2.7
Eligibility to Become Member ............................. 3
Acceptance as Member of Participant by Trustees ............... 4
Effective Time of Becoming a Member of Participant ............ 4
Effective Date of Acceptance .............................. 4
Appeal from Denial of Membership or Participation ............. 4
Term of Membership .................................... . 5
2.6.1 Termination of Membership ........................ 5
2.6.2 Termination of Participation ........................ 5
2.6.3 Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
2.6.4 AOC and LOC Membership ........................ 7
2.6.5 Membership and Participation Review and Termination 7
Meetings of the Membership .............................. 8
)
.'
,...--' . ..,~'~.....- .,...'.....~....._._.--.1----.---'*--.--_..
A.-ticle 3
Obligations of Members and Pa,oticipants
3.1 Obligations of Members and Participants ...................... 8
3.2 Optional Defense by. Member .............................. 9
3.3 Contractual Obligation ................."................ 9
Article 4
Appointment and Resignation of Trustees
4.1 Number of Trustees .................................... 10
4.2 Qualification of Trustees ...................... .\~. . . . . . .. 10
4.3 Appointment of Trustees ... 0 . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
4.4 Acceptance of Office of Trustee ........................... 10
4.5 Resignation of a Trustee ............. 0 . . . . . . . . . . . . . . . . .. 10
4.6 Removal of a Trustee .................................. 10
4.7 Regular Meetings . 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
4.8 Special Meetings . 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
4.9 Attendance at Meetings ................................. 11
4.10 Action by Trustees Without a Meeting ...................... 11
4.11 Officers of the Board of Trustees .......................... 11
4.12 Compensation of Trustees ............................... 11
4.13 Liability of Trustees, Trust Officers or Agents ................. 11
Article 5
Powers and Duties of the Board of Trustees
5.1 General Powers of the Board of Trustees .................... 12
5.2 Investment Committee .................................. 15
5.3 Underwriting Committee ................................ 15
5.4 Loss Prevention Committee .............................. 15
5.5 Appointment of an Administrator .......................... 15
5.6 Bonds and Insurance ................................... 15
5.7 SeIVice Company ...................................... 15
5.8 Duties of the Board of Trustees ........................... 15
5.9 Advisory Committee ................................... 16
Article 6
Accrual of Net Income
6.1 Accrual of Net Income .................................. 16
6.2 Proportions of Net Income Distribution ...................... 17
Article 7
Loss Fund Protection
)
7.1
7.2
7,3
7.4
7.5
Limits of Liability ..................................... 17
Excessive Losses ...................................,.. 17
Transfers Among Loss Fu nds ............"............... 17
Deferred Contributions .............".................. 18
Additional Insurance ................................... 18
T'
I
Article 8
Tennination
8.1 Term of Trust ........................................ 18
8.2 Distribution of Trust Assets ......................,....... 18
8.3 Deficiencies .....,.......,.........,.......,.......... 18
Article 9
Amendments
9.1 Method of Amendment ................................. 19
9.2 Limitation on Amendments ..................... .'.~. . . . , .. 19
Article 10
General Provisions
10.1 Title to Trust Assets ................................... 19
10.2 Nonalienation of Benefits ................................. 19
10.3 Examination of Books and Records by the Trust ............... 19
10.4 Examination of Books and Records by Members ............... 19
10.5 Right of Obtain Adjudication of Disputes .................... 20
10.6 Notice of Delivery of Documents .......................... 20
10.7 Gender, Number and Captions ............................ 20
10.8 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20
)
.-.-.--
CITY/COUNTY INSURANCE SERVICES TRUST
I3YL^ WS
ARTICLE 1
DEFINITIONS
Terms as utilized in the Bylaws shall have the meanings as set fohfl in this Article.
1.1 Administrator. The Administrator shall mean the person appointed by the
Trustees, pursuant to Article 3.13 of the Trust Agreement or any other power, to be
responsible for the daily activities of the Trust.
1.2 Administration. Administration shall mean, without limitation, costs and
expenses related to loss prevention, claims administration, data processing, financial
accounting and other Trust expenses, whether performed by the Trust or a Service
Company. Capital expenditures for facilities and equipment necessary to carry out the
purposes of the Trust shall be deemed as part of Administration.
1.3 Association of Oregon Counties. Association of Oregon Counties ("AOC")
shall mean the Association of Oregon Counties, an intergovernmental agency established
under the laws of the State of Oregon and having a principal place of business in Salem,
Oregon.
1.4 Bylaws. The Bylaws shall mean the Bylaws of the City/County Insurance
Services Trust as set forth herein and as amended from time to time whether before or after
the date hereof.
1.5 Contribution. Contribution shall mean required payments to purchase excess
insurance in the name of the Trust, to establish Loss Funds and any other necessary or
prudent reserves, and to provide administration. Contributions shall include payments made
pursuant to Article 7.4 hereof. In general and without limiting the foregoing, such
Contribution shall be developed in accordance, to the extent pertinent hereunder, with
rating guidelines adopted by the Trustees. The term Contribution does not include
premiums paid to crs for any insurance coverage provided on a group purchase or
individual basis. Payment of any Contribution does not constitute guarantee of any debt of
or a lending of credit to CIS or any other Member.
1.6 Fund Year. The Fund Year shall mean a twelve (12) consecutive month
period chosen from time to time by the Trustees. The initial Fund Year shall end on June
30 unless the Board of Trustees shall provide othelwise. A Fund Year may be any period
less than twelve (12) months if it is the first or last such year of the Fund or a year or years
) involving a change in the Fund Year.
- .....-
'~"'''""'"--''''''''''--'-~""'"-'''''~""-''~''---'''''''''''''''--'''''~-'''''-'~~~~i- ~
1.7 Governing Body. Governing Body shall mean the City Council in cities, the
Board of Commissioners or County Court in counties, and other similar governing bodies
of authorities, agencies or entities eligible to become Members.
1.8 Insurer. Insurer shatl mean any insurance company providing any insurance
contract to the Trust through the Trustees or Administrator and providing any benefit,
directly or indirectly, for any Member or Participant, including, but not limited to, any such
policy required by the Bylaws or that the Trustees deem necessary or prudent for the proper
operation of the Trust.
1.9 League of Oregon Cities. League of Oregon Cities ("LOC") shall mean the
League of Oregon Cities, an intergovernmental agency established under'tfte laws of the
State of Oregon and having a principal place of business in Salem, Oregon.
1.10 Loss Fund. Loss Fund shall mean all Contributions made by Members for
coverage pursuant to the Trust Agreement, Bylaws, Rules or other agreements pursuant or
incident thereto; all of the sums, contracts, policies or properties received by the Trustees
from the Members or other persons pursuant to the Trust Agreement, Bylaws, Rules or
other agreements pursuant or incident thereto for the uses, purposes and trusts as set forth
in the Trust Agreement, Bylaws and Rules; and all income, gains, and all other increments
of any nature whatsoever, if any, therefrom.
1.11 Member. Member shall mean any city, county or other entity which becomes
a Member pursuant to Article 2 of the Bylaws and whose membership has not been.
terminated or suspended pursuant to the Bylaws. )
1.12 Net Income. Net Income shall mean those monies remaining in a Loss
Fund after the payment of the costs of Administration and excess insurance, payment of
claims and establishment of prudent reserves for outstanding claims.
1.13 Official. Official shall mean any publicly elected or appointed official or
employee of a Member or entity eligible to become a Member.
1.14 Participant. Participant shall mean any city, county or other entity
purchasing insurance coverage through CIS which is offered on a group purchase or
individual basis.
1.15 Premium. Premium shall mean any sum due to an Insurer.
1.16 Risk Management Programs or Loss Prevention Programs. Risk
Management Programs or Loss Prevention Programs shall mean a program which may
include but shall not be limited to arrangements on behalf of Members or entities eligible
to become Members to avoid or limit losses, injuries, illness, damage or destruction; to
transfer the risk of or provide for reimbursement for losses in the areas of property and
casualty and may include but shall not be limited to the following:
(a) loss con trol activities;
(b) purchase of commercial insurance; )
(c) investigation and defense of claims;
2
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"---i'-~-"~""-'-"-" ..
(d) payment of losses;
(e) administration; and
(f) any other activities of a similar nature
1.17 Rules. Rules shall mean any Rules adopted by the Trustees pursuant to
authority granted in the Trust Agreement or Bylaws, as amended from time to time whether
before or after the date of adoption of the.Bylaws.
1.18 Service Company. Service Company shall mean any person or agency (other
than CIS) designated to operate or provide a claims administration service, a Loss
Prevention Program or insurance accounting program or perform similar or other services
as directed by the Board. ',,"
1.19 Trust. Trust shall mean the City/County Insurance Trust ("CIS") and as the
context requires all funds, property and assets of the Trust.
1.20 Trust Agreement. Trust Agreement shall mean the Declaration and
Agreement of Trust entered into by AOC and the LOC July 1, 1981 and as amended from
time to time whether before or after the date hereof.
1.21 Trustee. Trustee shall mean each person then serving as Trustee pursuant
to the Trust Agreement, including ex officio Trustees unless specifically indicated othelWise.
1.22 Trustees or Board of Trustees. Trustees or Board of Trustees shall mean
) the Board of Trustees of the City/County Insurance Trust.
ARTICLE 2
MEMBERSHIP AND PARTICIPATION
2.1 Eligibility to Become Member. Entities eligible to become Members or
Participants of the Trust are:
2.1.1 Any Oregon city which is a member of the LOC.
2.1.2 Any Oregon county which is a member of the AOC.
2.1.3(a) Any other public body, as defined by ORS 30.260, which is created
by a city or county under statutory or home rule charter authority.
2. 1.3 (b) Any Oregon community college created under ORS Chapter 341.
[3-18-94]
)
2.1.4 Further, such entities prior to become a Member or Participant must:
(a) Complete such written application as the
Trustees shall determine;
3
"'-"'T'
..,..
...
(b) Pass by its governing body such resolution or
contract as the Trust may prescribe:
(c) Pay the Contributions or Premiums to the Trust
determined pursuant to the provisions of the
Bylaws and the Rules;
(d)
Meet all other criteria established and provide all
information requested by the Trustees or an
Insurer which Trustees deem necessary and
prudent for the proper administration of the
Trust, including but not limited to undetwriting
criteria; and
'..:>
(e) Receive written acceptance of Membership or
Participation from the Trust.
2.2 Acceptance as Member or Participant by Trustees. As set forth in Section
2.1 of the Bylaws, an entity shall be accepted as a Member or Participant only upon the
approval of the Trustees and any Insurer whose approval is required as a condition of
providing insurance. The decision of the Trustees in this regard shall be final. Any such
entity which has been refused the status as a Member or Participant in the Fund may again
request such status after a period determined by the Trust.
2.3 Effective Time of Becoming a Member or Participant. The effective date
upon which an entity may become a Member or Participant shall be determined by the
Trustees and set forth in the Trustee's written notice of acceptance of membership or
participation. Notwithstanding the foregoing, the date for commencement of membership
or participation may be specified by such entity in its written request to become a Member
or Participant, in which case such entity shall become a Member or Participant upon such
date if approved by the Trustees.
2.4 Effective Date of Acceptance. Each entity, on becoming a Member or
Participant, thereby agrees to be bound by the provisions and terms of the Trust Agreement,
Bylaws, Rules, other agreements pursuant thereto and any documents required by an
Insurer, then in effect or that may be adopted from time to time by the Trustees.
2.5 Appeal from Denial of Membership or Participation. In the event an entity
eligible to become a Member or Participant and which has made application therefor, has
had membership or participation denied by the Administrator or any Committee of the
Board of Trustees, such entity may request the Board of Trustees to review such decision
of denial. Such request for review shall be made within thirty (30) days of such denial by
written notice to the Chairman of the Trust with a copy to the Administrator. The Trustees
shall meet at the time and place designated by the chairman. Procedural matters regarding
the conduct of the hearing shall be the same as set forth in Section 2.6.4 hereof regarding
membership and participation review and termination.
4
~.
'-T"
1
No appeal shall lie from a denial of membership or participation as a resu It of any
Insurer failing to give its required approval.
2.6 Term of Membership. Status as a Member will be continuous unless
terminated by the Member or the .Trust pursuant to the provisions of the Bylaws.
2.6.1 Termination of Membership. A Member mayor shall be suspended or
expelled from the Trust in accordance with the provisions set forth below.
(a)
Conduct that is determined by the Trustees in
their sole absolute discretion pursuant to 2.6.4 of
the Bylaws to warrant suspension or tennination.
;. .."
(b) Failure to pay any Contribution to the Loss
Funds or Premium required by the Trustees when
due and owing. Any Member failing to make a
Contribution or Premium required by proper.
notice be immediately suspended from
Membership by action of the Administrator
without further action by the Board of Trustees.
The Member's coverage and benefits hereunder
shall immediately cease on the effective date of
such notice. If the Member shall subsequently
submit its payment, the Administrator may, in his
discretion, reinstate such Membership.
(c) Failure to continue to comply with the Trust
Agreement, Bylaws, or Rules.
(d) Failure to continue to meet the criteria required
by any Insurer or the Trust including, without
limitation, undelWriting criteria.
( e) Failure to comply in good faith with Loss
Prevention Programs instituted by the Trust or
non-cooperation with staff of the Trust regarding
loss prevention procedures including, without
limitation, training programs.
Such suspension or expulsion shall be evidenced and preceded by a sixty (60) day
written notice to the Member from the Trustees or Administrator except that ten (10) days
notice shall be sufficient for non-payment of all or any part of a Contribution or Premium
as provided herein.
)
2.6.2 Termination of Participation. A Participant may be suspended or
expelled from the Trust in accordance with, and for the reasons set forth in 2.6.1 above.
Time limits and notice provisions shall be as set forth in the policy of insurance involved
and applicable laws and regulations.
5
'"--r
l\l11f
2.6.3 Withdrawal.
(a) Each Member shall continue its membership for
a period not less than that established for a
coverage by th'e Trust, which period shall not
exceed three (3) full Fund Years. If no such
period is established, the membership period
shall be one (1) full Fund Year. A Member may
withdraw prior to the end of such period upon
delivery to the Trust of a resolution adopted by
the Member's governing body authorizing
withdrawal. Such resolution shall be delivered '':'.
180 days prior to the effective date of withdrawal
for three year membership periods and 60 days
in all other cases. A Member withdrawing shall
have no claim on the reserves being maintained
by the Trust for losses incurred by the
withdrawing Member. The Trust shall continue .
the servicing of any covered claim after the
withdrawal of a Member. [12-3-92]
(b) If a Member does not give notice required
pursuant to 2.6.3(a) above, a sum calculated as
set forth below shall be deducted from any
Distribution of Net Income, or any number of
such Distributions, otherwise due to such
Member, until total deduction(s) equals:
The contribution for the coverage from which the
Member is withdrawing without notice,
multiplied by 1.0 minus the loss ratio for the
Trust for that coverage for the most current
three-year period, as of the end of the Fund Year
during which the notice was required to be given,
multiplied by one-half if less than two full
calendar years of a three-year membership
period shall have been completed prior to
withdrawal and by one-quarter otherwise.
[ 6-2&-94]
(c) In the case of withdrawal a Member shall remain
liable for any Contribution which has or will have
accrued for any Fund Year prior to the effective
date of such withdrawal.
(d)
Participants may withdraw at any time upon 30
days written notice to CIS. Refund of any
Premium will be determined in accordance with
the terms of the insurance policy involved.
)
6
--.._~.~,.....-., ..-"-. ........,-,.,.... -t,.". "
~
2.6.4 Aoe llnd LOC Membership. All Members llnd Pllrticipllnts Shllll
maintllin membership in the AOC or Lac. On failure to do so Members or Participants
shall be notified that their membership or participation in the Trust Shllll be terminllted if
AOe or LOe membership is not renewed prior to the due date of the next Contribution
to the Trust in the case of a Member, or policy expiration in the case of a Participant which
comes due thirty (30) days or more from the lapse in membership in the AOC or LOC.
Such termination shall be effective as of the due date of such Member's next Contribution
to the Trust or Participant's policy expiration. A Member or Participant not eligible to
maintain full membership in AOC or LOC may satisfy the provisions of this section by
maintaining any other membership status in AOC or LOC for which it is eligible,
(b)
)
)
~,._"'.. . "'-'-r""
2.6.5 Membership llnd Pllrticipation Review and Termim\tfon.
(a) When in the determination of the Administrator
a Member has engaged in conduct, other than
non-payment of Contributions or Premiums, that
warrants review of that membership or
participation status, the Administrator shall file a
written report with the Trustees. Said report
shall contain a summary of the facts and the
Administrator's recommendations regarding
continued membership or participation status.
A copy of the Administrator's report shall be
selVed by mail on the Member or Participant
along with a notice of hearing of the Trustees.
Such notice of hearing shall include the place,
date and time of the hearing and a request for
attendance at the hearing. At their discretion the
Trustees may submit written questions to the
Member or Participant, written answers to which
must be mailed to the Administrator no later
than seven (7) calendar days prior to the date of
the hearing. A Member or Participant objecting
to the report and recommendations of the
Administrator shall have the right to submit a
written statement to the Trustees setting out in
detail the basis of the objection and any other
information the Member or Participant desires to
submit. Said statement must be mailed to the
Administrator no later than five (5) calendar days
prior to the hearing. Such hearing shall be
scheduled no less thlln ten (10) nor no more
than twenty (20) dllYS from the date of such
notice of the Trustees; provided, however, that if
the Trustees submit written questions to the
Member or Participant, the dllte of such hearing
shall be set or re-set so that such Member or
7
,...,.........,._.-..."~_~".,._~...."..._".__._'___.._....~_ ...'_.-,..~.".,".,,"-_.......__...-..,....__~. I
Participant shall have at least fifteen (15) days
from the mailing of such questions by or on
behalf of the Trustees to prepare such written
answers.
(c) The Trustees shall meet at the time and place
designated in the notice of hearing. The Member
or Participant shall be entitled to be represented
at the hearing and present an oral statement and
other information.
(d)
Following the hearing, the Trustees shall affirm,
modify, or reject the recommendation of the
Administrator. The Board shall have the
authority to place a Member or Participant on
probation, the terms and duration of which it
shall determine. A copy of the Trust's decision
shall be served by mail on the Member or
Participant.
'_l"
(e) The action of the Trustees shall be final and
binding.
2.7 Meetings of the Membership. One or more meetings of the Members of the
Trust shall be held annually at such time and place as determined by the Trustees.
Members shall be notified of the time and place of each meeting by at least ten (10) days
written notice. Such notice may be by first class mail and may be included as part of any
Trust publication.
ARTICLE 3
OBLIGATIONS OF MEMBERS AND P ARTICIP ANTS
3.1 Obligations of Members and Participants. The obligations of Members and
Participants of the Trust shall be as follows:
3.1.1 To appropriate all adequate available revenues, as permitted by
applicable law, for and to pay promptly all Contributions and Premiums to the Trust at such
times and in such amounts as shall be established by the Trustees within the scope of the
Trust Agreement, Bylaws and Rules.
3.1.2 To allow the Trust and its agents reasonable access to all facilities of
the Member or Participant and all records, including but not limited to financial records,
which relate to the purposes or powers of the Trust.
8
""<or ,....*.
3.1.3 To allow attorneys selected by the Trust or Service Company to
represent the Member or Participant in investigation, settlement discussions and all levels
of litigation arising out of any claim made against the Member or Participant within the
scope of coverage furnished by the Trust.
3.1.4 To furnish full cooperation with the claims adjusters, the Service
Company and any agent, employee, officer or independent contractor of the Trust relating
to the purposes and powers of the Trust.
3.1.5 To follow loss reduction and prevention procedures established by the
Trust within the purposes and powers of the Trust.
'., ,.
3.1.6 To furnish to the Trust any budget and audit information of revenues
and expenditures of the Member or Participant for any fiscal year for which figures are
requested by the Trust.
3.1.7 To report as promptly as possible all incidents whjch could result in the
Trust being required to consider a claim within the scope of coverage undertaken by the
Trust in accordance with such rules as the Trustees shall prescribe.
3.1.8 All information gathered or received by the Trust pursuant to any
provision of these Bylaws shall be utilized by the Administrator only in connection with the
operation of and to further the purposes of the Trust and shall not otherwise be distributed,
disseminated or communicated to any person unless authorized by the Board of Trustees
or required by law.
3.2 Optional Defense by Member. The Trustees shall promulgate Rule(s) to
permit Members a reasonable opportunity in casualty cases or claims to participate in their
own defense or to prevent the settlement of such cases or claims by the Trust in a manner
contrary to the wishes of the Member.
The Rule(s) shall provide that in the event that a Member exercises its privilege to
prevent the settlement of a case or claim, the Member shall be responsible for any
additional cost, including but not limited to legal and investigation expense and subsequent
judgment or settlement, above the costs which would have been incurred had the Member
not elected to prevent the acceptance of a settlement offer or proposal pursuant to this
section.
)
3.3 Contractual Obligation. The Trust Agreement, Bylaws, Rules and
Resolution shall constitute a contract between each Member and Participant and the CIS
Trust. The obligations and responsibilities of the Members and Participants set forth
therein include the obligation to take no action inconsistent with the Trust Agreement,
Bylaws and Rules as originally written or validly amended. Such obligation shall continue,
as necessary, after cessation, for whatever reason, of membership or participation. The
agreement of a Member or Participant thereto shall be evidenced by a properly signed
application for Membership or Participation and a signed copy of a resolution or contract
adopted by its governing body. No Member or Participant agrees or contracts herein to be
held responsible for any claims, in tort, contract or otherwise, made against any other
9
'-"--r'" -..'''.. ,...~""..__._...._. ._...........u.....__...._....._..
Member or Participant. Nothing herein contained shall be deemed to create any
relationship of surety, indemnification guarantee or responsibility between Members or
Participants for the debts of or claims against any other Member or Participant or on the
part of any Member or Participant with respect to CIS or the Trust.
ARTICLE 4
APPOINTMENT AND RESIGNATION OF TRUSTEES
4.1 Number of Trustees. The Board of Trustees will be composed of eight (8)
individuals as provided in the Trust Agreement. -:>
4.2 Qualification of Trustees.
(a) Each Trustee shall at the time of appointment and at all times while
serving in such office be an elected or appointed official of a member
of AOC or LOe as provided in the Trust Agreement.
(b) In the event that a Trustee shall cease to be qualified pursuant under
paragraph 4.2(a) above, such Trustee may continue to serve for a
period of 90 days or until appointment of a successor, whichever shall
come first. [3-18-94]
4.3 Appointment of Trustees. The Board of Directors of AOe and LOe shall
each appoint three (3) Trustees as provided in the Trust Agreement. The Executive
Directors of AOe and LOC, or their designees, shall serve as ex officio Trustees as
provided in the Trust Agreement.
4.4 Acceptance of Office of Trustee. Each Trustee shall accept the office of
Trustee by execution and delivery to the Secretary of a full and unconditional written
acceptance of such appointment as provided in the Trust Agreement.
4.5 Resignation of a Trustee. A Trustee may resign by notification to the
Secretary of the Trust. If such notification is made orally, the Secretary shall reduce it to
writing. The written notice of resignation shall be delivered to the Executive Director of
AOe or LOe, with a copy to the Chairman of the Trust. Such written notice of resignation
may state a prospective date upon which such resignation shall become effective; otherwise,
such resignation shall become effective upon acceptance by the Board of Directors of the
AOe or LOe. Upon the effective date of any such resignation, such Trustee shall become
and be fully discharged from all further duties, responsibilities or liabilities associated with
such office. A Trustee, upon vacating such office shall promptly deliver to the remaining
Trustees or Administrator any and all records, books, documents, monies or other property
of the Trust in the possession or under the control of such Trustee.
4.6 Removal of a Trustee. An appointed Trustee may be removed from office '\
for just cause by the Board of Directors of AOC or LOC as the case may be. Without l
limiting the foregoing, the unexcused failure to attend two consecutive meetings of the
10
"--Y--'" ............. ..~....................._....".....,....~.._-"_...._-
..
Board or two consecutive meetings of a Committee of the Board or four unexcused failures
to attend, in the aggregate, meetings of the Board or a Committee of the Board in any
twelve (12) month period shall be deemed prima facie evidence of just cause.
4.7 Regular Meetings. The Board of Trustees may provide, by resolution, the
time and place, either within or without the State of Oregon, for the holding of regular
meetings without other notice than such resolution.
4.8 Special Meetings. Special Meetings of the Board of Trustees may be called
by the Chairman or any four (4) Trustees. The person or persons authorized to call any
such Special Meeting may fix the time and any place, within the State of Oregon, for the
holding of any such Special Meeting of the Board of Trustees called by him or them. Any
such meeting may be called upon at least five (5) days written notice delivered personally
or mailed to each such Trustee at his or her business address or residential address, or by
telegram. Such notice shall specify the date, time, place and purposes thereof.
4.9 Attendance at Meeting. The attendance of a Trustee at any meeting of the
Board of Trustees shall constitute a waiver of notice of such meeting, except where a
Trustee attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
4.10 Action by Trustees Without a Meeting. Any action, other than an appeal
pursuant to sections 2.5,2.6 or 5.1.15, which may be taken at a meeting of the Trustees may
be taken without a meeting if a consent in writing setting forth the actions so taken shall
be signed by all of the Trustees then serving.
4.11 Officers of the Board of Trustees. The Trustees shall annually elect from
themselves, as provided by the Trust Agreement, a Chairman and a Vice-Chairman, for a
term from July 1 of the year in which elected to June 30 of the following year. The
Chairman shall preside at all meetings of the Trustees. The Vice-Chairman shall preside
at all meetings in the absence of the Chairman. In the absence of both the Chairman and
the Vice-Chairman the Trustees constituting a quorum may elect a Chairman pro-tern for
purposes of conducting a meeting and transacting Trust business. The Trustees shall also
elect a Secretary who mayor may not also be a Trustee. The Secretary shall cause the
records of the proceedings of the meetings of the Trustees to be kept and maintained. All
such officers of the Board of Trustees who are also Trustees may vote on any issue or
matter properly before the Board of Trustees.
4.12 Compensation of Trustees. The Trustees may reimburse themselves for
reasonable expenses properly and actually incurred in the course of acting as Trustees. To
the extent that such Trustee is reimbursed by a Member or other entity for expenses as
Trustee, such Trustee shall not be so reimbursed, but such reimbursement may be paid to
the Member or other entity, as the case may be, with respect to which such Trustee is an
Official.
4.13 Liability of Trustees, Trust Officers or Agents. Trustees, officers and agents
) of the Trust shall use ordinary care and reasonable diligence in the exercise of their powers
and in the performance of their duties. They shall not be liable for any mistakes of
11
.........y-...
...., .........,_.._". "--1-'" __,~.._"._..."_._,~'...,,......,.. h_.', ,"--, .....-.,.....~..".__.
...
judgment or other action made, taken or omitted by them in good faith, nor for any action
taken or omitted by any agent, employee or independent contractor selected with reasonable
care, nor for loss incurred through investment of funds or failure to invest. No Trustee
shall be liable for any action taken or omitted by any other Trustee. No Trustee shall be
required to give a bond or other security to guarantee the faithful performance of their
duties hereunder. To the extent permitted by law, the Trust shall indemnify, defend and
hold harmless any Trustee, officer or agent of the Trust for actions taken by the Board or
performed by such Trustee, officer or agent within the scope of his duties for the Trust.
The Trust may purchase insurance providing similar coverage for such Trustees, officers or
agen ts.
....~
ARTICLE 5
POWERS AND DUTIES OF THE BOARD OF TRUSTEES
5.1 General Powers of the Board of Trustees. The Trustees shall have such
powers as may be necessary or prudent to discharge their responsibilities in managing and
controlling the Trust, whether or not mentioned herein, including but not limited to the
following:
5.1.1 To accept, determine and make reasonable arrangements for the
payment by or on behalf of each Member or Participant of all Contributions and Premiums
due.
5.1.2 Administer the Loss Funds, collect Contributions thereto and pay
authorized losses in behalf of its Members.
5.1.3 Establish loss control procedures and advise and educate Members and
Participants in loss control and risk reduction.
5.1.4 Provide risk management services, including defense of and settlement
of claims, and engage a Service Company.
5.1.5 Purchase reinsurance or excess insurance as necessary to protect the
interests of the Members and the Trust.
5.1.6 Determine the general policy for operation of the Trust that shall be
followed by all committees, officers, agents and independent contractors employed by the
Trust.
5.1.7 Adopt rules for the conduct of the affairs of the Trust and in recording
of data required by law or sound management.
5.1.8 Terminate membership and participation of any Member or Participant
who fails to comply with the reasonable requirements of the Trustees concerning payment
of Contributions or Premiums, compliance with loss prevention programs or cooperation
12
__C.-Y-' -.-.-.. t....
"
with the Trust staff and agents or for any other reason that may be detrimental to the fiscal
soundness or efficiency of the Trust.
5,1.9 To designate a bank or banks as a depository of the Trust and to
designate one or more persons to withdraw sums therefrom for the purposes of the Trust.
5.1.10 To purchase contracts of insurance and to hold all insurance policies
issued by Insurers and to deal with Insurers on behalf of the Members and Participants with
respect to all matters pertaining to the Trust, including without limitation, agreeing with
Insurers regarding insurance programs and the requirements for insurance thereunder for
the Members and Participants of the Trust. The Trustees may enter inN,such other risk
management related agreements, insurance programs or authorized self-insurance programs
as they deem necessary or advisable for the benefit of Members and Participants.
5.1.11 To receive, hold, manage, invest and reinvest such monies and property
of the Fund in such bonds or other securities as permitted by applicable law.
5.1.12 To require and receive such reports from the Members, Participants
or Administrator as they deem necessary or advisable for the proper management of the
Trust and the fulfillment of the duties of the Trustees.
5.1.13 To employ such agents, advisors and counsel as may be reasonably
necessary in collecting, managing, administering, investing and distributing the assets of the
Fund, and to charge the expense thereof to the Trust.
5.1.14 To sue and be sued, or to prosecute and defend any and all actions
affecting the Trust or its property either in the name of the Trust or in their own names;
to compromise or settle any suit, claims or demands, or waive or release any rights relating
to the Trust or its property.
5.1.15 To interpret the terms of documents under which coverages are offered
to Members and to consider appeals relating to such interpretations in accordance with the
notice and procedural provisions of 2.6.5.
5.1.16 To adopt and enforce Rules not inconsistent with the provisions of the
Bylaws or Trust Agreement as the Trustees may from time to time deem expedient.
5.1.17 To make, execute, acknowledge and deliver any and all documents that
may be necessary or appropriate to carry out the powers herein granted.
5.1.18 To appoint from among themselves such committees as the Trustees
shall deem expedient which may be vested with such powers as the Trustees in their sole
discretion shall determine.
)
5.1.19 To borrow or raise money for the purpose of the Trust in such amount,
and upon such terms and conditions as the Trustees shall deem advisable; and for any sum
so borrowed to issue the promissory note of the Trust, and to secure the repayment thereof
by creating a security interest in all or any part of the property of the Trust; and no person
13
,,,.y~
lending such money shall be obligated to see that the money lent is applied to Trust
purposes or to inquire into the validity, expedience or propriety of such borrowing. No such
debt incurred by the Trust shall be deemed a debt of any Participant or Member.
5.1.20 To hold cash, uninvested, for such length of time as the Trustees may
determine without liability for interest thereon.
5.1.21 To continue to have and to execute, after the termination of the Trust
and until final distribution, all of the title, powers, discretions, rights and duties conferred
or imposed upon the Trustees hereunder, or by law.
5.1.22 To construe and interpret the Trust Agreement.
....'"
5.1.23 To have a judicial settlement of their accou nts and judicial
determination of any questions in connection with their duties and obligations hereunder,
or in connection with the administration or distribution thereof. The costs and expenses,
including accounting and legal fees, for such judicial settlement of accounts or other judicial
determination shall be paid by the Trust as a general administrative expense to the extend
permitted by applicable law.
5.1.24 To purchase as a general administrative expense of the Trust general
liability insurance and other insurance for the benefit of the Trust or the protection of the
Trustees, Trust employee or agents against any losses by reason of errors or omissions,
breach of fiduciary duty or negligence.
5.1.25 To enter into any and all contracts and agreements to carry out the
purposes of the Trust or to administrate and operate the Trust and to do all acts as they,
in their discretion, may deem necessary or advisable.
Such contracts and agreements and acts shall be binding and conclusive on Members,
Participants, employee and agents.
5.1.26 To appoint one or more investment managers to supervise and direct
the investment and reinvestment of a portion or all of the Fund in accordance with the
provisions hereof and applicable law and in the same manner and with the same powers,
duties, obligations, responsibilities and limitations as apply to the Trustees as set forth
herein and to pay reasonable compensation for such services.
5.1.27 To acquire, hold, own, rent or lease, alone or in conjunction with any
other party or parties, and for use in connection with the purposes of the Trust, any
property, real or personal, and to pay the appropriate pro rata part of the mortgage
payments, property taxes, assessments, insurance, maintenance and ordinary repairs on all
such property.
5.1.28 To employ staff upon such terms and conditions as the Trust shall
deem necessary to carry out the purposes of the Trust.
5.1.29 To do all acts, whether or not expressly authorized herein, which the )
Trustees may deem necessary or proper in connection with the Trust.
14
...
5.2 Investment Committee. The Trustees may establish an Investment
Committee. In selecting committee members the Board shall consider investment expertise
and personal and professional qualifications and shall make appointments for such terms
as it may deem desirable.
5.3 UndeIWriting Committee. The Trustees may establish an Undelwriting
Committee. The duties of the UndeIWriting Committee shall be determined by the Trustees
but may include recommendations regarding development of undeIWriting standards and
rating procedures, and review of applications for membership or participation.
5.4 Loss Prevention Committee. The Board of Trustees may' !rstablish a Loss
Prevention Committee. The duties of the Loss Prevention Committee shall be determined
by the Trustees, but may include arranging for and evaluating the regular conduct of loss
control services, production of recommendations to prevent losses, maintenance of a loss
control manual and the conduct of seminars regarding loss control.
5.5 Appointment of an Administrator. The Trustees shall appoint an
Administrator to manage the daily affairs of the Trust. The Administrator shall serve under
such terms and conditions as the Trustees shall prescribe. Such Administrator shall not be
an owner, officer or employee of any Service Company. The duties of the Administrator
shall include, without limitation, carrying out of policies established by the Board, locating
and recommending various contractors, supervising and reporting on contractor's
performance, the provision of financial and accounting reports and the maintenance of
excess reinsurance or other insurance.
5.6 Bonds and Insurance. Any Administrator, employee or agent shall be
required to be bonded or insured in a form and amount set by the Trustees. The cost of
such bonds or insurance shall be paid as an expense of the Trust.
5.7 Service Company. If services are not otheIWise provided by the Trust, the
Board shall obtain the services of a Service Company for the purpose of servicing claims.
The Service Company shall adhere to guidelines for the performance of its duties as set
forth by the Trustees.
5.8 Duties of the Board of Trustees. In connection with their management and
control of the Trust, the Trustees shall:
5.8.1 Pay claims to or on behalf of the Members in accordance with
purposes of the Trust Agreement, Bylaws, Rules and coverage documents.
5.8.2 Create a reserve for the payment of claims.
5.8.3 Payor provide for the payment on behalf of Members and
Participants hereunder all Premiums as they become due to an Insurer on any policy of
msurance.
\
)
5.8.4 Cause to be maintained accounts of all investments, receipts,
disbursements and all other transactions affecting funds or property of the Trust.
15
-~-y-
.sx.s Engage an independent certified public accountant to perform
a financial audit of the Trust at least once per Fund Year and to report regarding such
audit to the Members at the meetings of the Members.
5.8.6 Engage" an independent and qualified actuary to perform
actuarial calculations and provide advice regarding the sufficiency of the Loss Funds as
frequently as is required for prudent management.
5.8.7 Maintain minutes of all meetings of the Trustees and Members
and cause copies thereof to be distributed in a timely manner to all Trustees.
5.8.8 Publish such claim reports, financial statements and actuarial
projections as necessary to advise Members of the current and projected financial status of
the Trust.
5.8,,9 Pay all taxes and assessments that may be levied or assessed
under existing or future laws upon, or in respect of, the Trust or its income.
5.8.10 Cause the terms and provisions of the Trust Agreement, the
Bylaws and the Rules to be performed and carried out and the assets of the Trust to be
properly held and administered.
5.8.11 Payor provide for the payment of all reasonable and necessary
expenses of administering the Trust and all charges reasonably incurred by the Trustees in
protecting the funds and property of the Trust and in carrying out the purposes of the Trust.
5.9 Advisory Committees. The Board of Trustees may, in its sole, absolute
discretion appoint advisory committees to the Board of Trustees or any Committee of the
Board comprised of individuals who are not Trustees but whose expertise, experience or
knowledge may be helpful to the Trustees in the performance of their duties. The Board
of Trustees may provide for such compensation to such members of any advisory committee
as it shall in its sole discretion determine.
ARTICLE 6
ACCRUAL OF NET INCOME
6.1 Accrual of Net Income. Net Income, if any, shall accrue to the Loss Funds
as it is earned. No Member shall have a legal enforceable right to any specific share thereof
except as herein provided. If the Trustees should determine that the amount in a Loss
Fund shall be greater than is required to pay claims and maintain prudent reserves, such
surplus funds shall be distributed to the Members as provided herein. Such distribution
shall be by means of reduction in Contributions for similar coverage due in the next Fund
Year, or at the sole discretion of the Trustees, by means of cash payments to current
Members.
16
.,-"....T...."...~..__. ......-... "-,_..,,,,~...
I
6.1.1 Distribution of Net Income to entities which, at the time of distribution,
are not Members for the coverage for which the distribution is made shall be by means of
credits. Such credits may be applied to contributions for the same coverage for which the
distribution was made if such entity shall becolT!e a Member in a Fund Year beginning not later
than three (3) years from the date of the distribution.
6.1. 2 No distribution of Net Income, accrued to any Fund Year beginning after
June 30, 1988, if any, shall be made in any manner to any Member which withdraws prior to
the end of the period of Membership established by the Trust, which period shall not exceed
three (3) full Fund-Years. [3-18-94]
'.."
6.2 Proportions of Net Income Distribution. In connection with any coverage which
the Trust may offer to its Members in any Fund Year the Net Income attributable to said
coverage shall be distributed as provided under 6.1 above, at such time as the Trustees shall
determine, to those Members participating in said coverage in such proportions as the Trustees
may by Rule determine. Such determination shall be non-discriminatory among such Members
making similar Contributions and having similar payments of, or reservations for, claims. The
Trustees may furthermore, from time to time, modify or change the determination as to the
Members' proportionate shares of the future Net Income attributable to a coverage, provided that
no modification or change shall be made after the start of any Fund Year beginning after June
30, 1988 to which the distribution applies. In the event the Trust shall have any Net Income as
to which the distribution among its members has not been determined by the Trustees, then such
net income, if and when distributed, shall be in proportion to the Members' respective
Contribution during the Fund Year to which the net income applies.
)
ARTICLE 7
LOSS FUND PROTECTION
7.1 Limits of Liability. The Trust will make or secure payment on behalf of each
Member for payment or settlement of claims in accordance with the coverage documents.
7.2 Excessive Losses. In the event that a single loss or series of losses should
exceed the amount of protection afforded by the Loss Fund, other insurance carried by the Trust
and provisions for future Contributions, then payment of valid losses shall be the obligation of
the individual Member or Members against whom the claim(s) were made and perfected by
judgment or settlement.
7.3 Transfers Among Loss Funds. The Trustees may, in their sole discretion,
transfer monies among Loss Funds, in the event of excessive losses in anyone Loss Fund.
However, such transfers shall be made only when the deficit can be reasonably expected to be
made up from future Contributions and earnings of the Loss Fund, which would otherwise show
a deficit, by the end of the next full Fund Year after the transfer is made.
)
17
"""-'~"""""'>"'~"--~"'~"'~>""
7.4 Deferred Contributions. As indicated in Section 1.5, the Contributions of a
Member shall include a deferred Contribution for protection of the Loss Fund. In the event that
payment of a deferred Contribution is required, such deferred Contribution shall be paid first
by those Members with excess losses, as calculated by rule adopted by the Trust, and then, if
necessary by all the Members who participated' for such coverage during the Fund Year for
which such deferred Contribution applies and in the proportion that each such Member's
Contribution amount bears to the total Contribution amount of all Members for such coverage
in such Fund Year.
The Board of Trustees shall determine the Contribution of the Members prior
to the beginning of every Fund Year upon the advice of the actuary required by these Bylaws.
< ..J>
The Board of Trustees, in their sole discretion, may forgo collection of any
Deferred Contribution otherwise due from any Fund Year, when such amounts are not necessary
to pay all claims of Members of the Trust and other expenses arising in that Fund Year.
7.5 Additional Insurance. Membership in the Trust shall not preclude any Member
from purchasing insurance in addition to any coverage provided by the Trust. The Trust shall
be notified of any purchase of such other insurance.
ARTICLE 8
TERMINATION
8.1 Term of Trust. The Trust shall continue until terminated in accordance with the
terms of the Trust Agreement. Notwithstanding the foregoing, the Trustees shall continue to
serve in office until all obligations of the Trust have been fully and finally discharged or
adequately provided for. Thirty (30) days prior to the termination of the Trust the Trustees shall
notify each Member of such termination.
8.2 Distribution of Trust Assets. As soon as practicable after termination of the
Trust, the Trustees shall make appropriate provisions for the payment of all liabilities incurred
prior to such termination and for liquidation of all assets of the Trust. Upon the satisfaction of
all obligations of the Trust, the Trustees shall return all remaining assets of the Trust to the
Members in proportion that each such Member's Contributions in connection with coverage
offered by the Trust to its Members during each Fund Year during which it was a Member,
bears to the total Contributions of all such Members during each Fund Year of the Trust.
8.3 Deficiencies. No Member shall be responsible for any claim or judgment
against any other Member or the Trust except to the extent of the assets of the Loss Fund, any
insurance carried by the Trust and future Contributions as provided herein.
18
"-T
ARTICLE 9
AMENDMENTS
9.1 Method of Amendment. The Bylaws may be amended at any time by a
written instrument approved by the Trustees' then serving, a copy ofwhich shall be furnished
to each Trustee.
9.2 Limitation on Amendments. No amendment shall be adopted which alters
the basic purpose of the Trust, conflicts with the Trust Agreement or w,itp any applicable
law or government regulation, causes the use or diversion of any part-of the Trust for
purposes other than those authorized by the Trust Agreement, or retroactively deprives any
person of a vested right or interest.
ARTICLE 10
GENERAL PROVISIONS
10.1 Title to Trust Assets. Title to the funds and property of the Trust, including
without limitation Loss Funds, shall be vested in and remain exclusively in the Trustees and
no Member shan have any right, title or interest in the Loss Funds nor any right to
Contributions made or to be made thereto, nor any claim against any Member on account
thereof, except only as provided from time to time by the Bylaws.
10.2 Nonalienation of Benefits. The funds and property of the Trust, including
without limitation Loss Funds, shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge by any person other than the
Trustees and their duly authorized representative to the extent and for the purposes as
herein specifically provided.
10.3 Examination of Books and Records by the Trust. The Trust, its agents,
employee or attorneys shall be permitted at all reasonable times prior to the expiration of
two (2) years after the termination of a Member's participation in the Trust to examine the
Member's books, vouchers, contracts, documents and records of any and every kind which
show or tend to show or verify the amount which is payable from the Fund to such Member
or any of its Employee.
10.4 Examination of Books and Records by Members. Any member, or their
designated representative, shaH be permitted to examine the Trust's books, contracts,
documents and records. However, such examination shall not extend to matters relating to
other Members. Such examination shaH be limited to such times and places as is
reasonable. The cost of copying, transcribing or abstracting records shaH be borne by the
Member.
19
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--.--1
10.5 Right to Obtain Adjudication of Disputes. In the event any question or
dispute shall arise as to the property or person or persons to whom any payment shall be
made from the Fund, the Trustees may withhold such payment until an adjudication of such
question or dispute satisfactory to the Trustees in their sole absolute discretion shall have
been made, or the Trust shall have been adequately indemnified against loss.
10.6 Notice of Delivery of Documents. Any notice required to be given
hereunder, except as otherwise provided, shall be in writing and by certified mail, return
receipt requested and shall be deemed to have been given as of the date of posting to
whomever may properly receive legal seIVice of process for the addressee of such notice.
Any notice actually received shall be deemed properly given whether or notpursuant to the
. ...
provisions of the Bylaws. ..C
10.7 Gender. Number and Captions. Wherever any words are used herein in the
masculine gender, they shall be construed as though they were also used in the feminine or
neuter gender in all cases where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though they we-re also used in the
plural form in all cases where they would so apply. Titles of articles and headings of
sections and subsections are inserted for convenience of reference only and are not to be
considered in the construction hereof.
10.8 Construction. This Agreement is created and shall be construed in
accordance with the laws of the State of Oregon. All questions pertaining to its validity or
construction not otherwise preempted shall be determined in accordance with the laws of
the State of Oregon. If any provision contained in the Bylaws or Rules should be held
invalid, unenforceable or unconstitutional the remainder of the provisions not subject to
such adjudication shall not be affected and shall continue in full force and effect. If any
provision contained in the Bylaws or Rules should be held invalid, unenforceable or
unconstitutional as to any Member or Participant, the provisions of the Bylaws and Rules
shall continue in full force and effect as to any or all other Members and Participants.
Date of Adoption: March 16, 1988
20
., "'"T'"
CITY/COUNTY INSURANCE SERVICES TRUST
NET INCOME DISTRIBUTION
RULE NUMBER 1
The City/County Insurance Services Trust (CIS) adopts the following Rule
regarding the distribution of Net Income from pooled self-insurance operations
for all Fund Years beginning on or after July 1, 1988.
1. The amount of Net Income available for distribution shall be determined
in accordance with the Bylaws, upon actuarial advice regarding prudent
reserves for outstanding and unreported claims.
2. An initial determination of Net Income available for distribution will
be made at the end of the 24th, 36th and 48th month of the Fund Year for
Auto Physical Damage and Property; Auto Liability; and General Liability
and Workers' Compensation, respectively.
3. If, upon actuarial advice, the Trustees, in their sole discretion,
conclude that the amount of Net Income available for distribution cannot
be prudently determined at such times as noted under 2. above, further
determinations shall be made at 12 (twelve) month intervals.
4. At such time as the Trustees determine an amount of Net Income available
for distribution, said Net Income shall be distributed as follows.
a. One-third (1/3) of the Net Income will be distributed to Members who
made Contributions in the Fund Year, for the coverage for which Net
Income is to be distributed, in the proportion that each Member's
Contribution bears to the total Contributions of all members in the
Fund Year, for the coverage for which Net Income is to be
distributed.
b. Two-thirds (2/3) of the Net Income will be distributed to Members
who made Contributions in the Fund Year, for the coverage for which
Net Income is to be distributed, in the proportion that each
member's Contributions, less incurred losses, bears to the total
Contri but ions, 1 ess total incurred losses, of all members in the
Fund Year, for the coverage for which Net Income is to be
distributed. However, no distribution shall be made of the two-
thirds of Net Income to Members whose Contributions, in the Fund
Year, for the coverage for which Net Income is to be distributed,
are less than their incurred losses.
5. More than one distribution may be made for a given coverage for any Fund
Year. In the event of a second, or subsequent, distribution the amount
to be distributed to a Member shall be computed in accordance with this
rule, based on Contributions and loss information as of the date of such
later distribution. The amount so determined shall be reduced by any
amounts previously distributed to the Member.
6. Except in the event of a second, or subsequent distribution, the amount
distributed to a Member shall be final. No adjustment will be made due
to changes in incurred losses after the date of the distribution.
ADOPTED: 8/16/91
"""Y"
EXAMPLE - APPLICATION OF RULE 1
The following example is included for illustration only and does not constitute a part of
Rule 1.
Amount to be Distributed
Total Contributions in Fund Year
Total Incurred Losses in Fund Year
Difference
$ 600,000
2,000,000
1,20<r,oOO
800,000
Entity A Contributions in Fund Year
Entity A Incurred Losses in Fund Year
Difference
20,000
10,000
10,000
Entity B Contributions in Fund Year
Entity B Incurred Losses in Fund Year
Difference
40,000
50,000
o
Distribution
Entity A
1/3 of $600,000 x 20,000/2,000,000
2/3 of $600,000 x 10,000/800,000
$2,000
5,000
Total
$7,000
Entity B
1/3 of $600,000 x 40,000/2,000,000
2/3 of $600,000*
=
$4,000
o
Total
$4,000
No distribution because incurred losses exceed distribution.
...
.. '"-Y--
-r---.----....--....
CITY/COUNTY INSURANCE SERVICES TRUST
CONTRIBUTIONS AND LOSS ALLOCATION
RULE NUMBER 2
The City/County Insurance Services Trust (CIS) adopts the following Rule regarding
Contributions and Loss Allocation for pooled self-insurance operations for all Fund Years
beginning on or after July 1, 1988.
1. Each Member shall be charged a Contribution for such coverage as the Member elects
in a Fund Year in accordance with the rating schedules adopted by CIS. A portion of
such Contribution shall be deferred. Collection, if any, of such deferred Contributions
shall be made in accordance with 2 and 4 below. 'n"
2. Such Contributions shall be a deposit against which losses and allocated losses shall be
charged as follows:
a. All losses up to the level chosen by the Member, which level shall be $5,000 or
such higher amount as shall be mutually agreed by the Member and CIS, shall be
charged against the initial Contribution of the Member for the Fund Year in
which the losses occurred.
b.1. In addition, a share of all losses incurred by Members for whom coverage is
provided, within a pooled layer for a Fund Year, will be allocated to each
Member in such a layer in the proportion that the losses in the Fund Year of each
such Member, in the coverage layer' below that for which losses are to be
allocated, bears to the total of losses of all Members in such lower coverage layer
in the Fund Year.
b.2. In the event that a Member has no losses in a Fund Year in the coverage layer
below that for which losses are to be allocated, then the share of such Member
of all losses incurred by Members for whom such coverage is provided shall be
allocated to such Member in the proportion that the Contribution of such Member
bears to the total Contribution of all Members for the coverage for which losses
are to be allocated.
c. Losses allocated as set forth in 2.b. above will be computed at the end of each
Fund Year and shall be charged against the Member's Contribution for the Fund
Year in which the losses occurred.
d. At the end of the 24th and 36th month of a Fund Year, for Auto Liability and
General Liability coverages respectively, or at such later date as the Trustees may
determine, any Member whose Contribution for that Fund Year is less than losses
and allocated losses, computed as set forth in 2.b. and 2.c. above, shall be
required to pay to CIS some or all of the deferred Contribution. The amount of
such deferred Contribution due shall be the amount by which the Contribution
previously paid is less than losses and allocated losses.
....T
-
3..ule Number 2
Page 2
e. At the end of each twelve month period subsequent to the times set forth in 2.d,
above, the losses and allocated losses shall be again computed for each Member
as set forth in 2.b. and 2.c. above. If the total Contributions, including any
deferred Contributions paid pursuant to 2.d. above, of any Member is less than
losses and allocated losses, such Member shall be required to pay some or all of
the deferred Contribution.
f. The recomputations as set forth in 2.e. above shall continue until such time as all
losses are paid and the statute of limitations on all possible claims has run or such
earlier time as the Trustees may determine. ' :>
3. The total of all Contributions paid by a Member for a coverage for a Fund Year,
including any deferred Contributions paid pursuant to 2. above, shall be used for
purposes of determining distribution of Net Income pursuant to Rule 1.
4.
In the event that actual and projected losses paid or reasonably expected to be paid by
any Loss Fund for any Fund Year exceed initial Contributions of Members and deferred
Contribution of Member paid pursuant to 2. above, the Trustees may require the payment
of deferred Contributions as provided by Article 7.4 of the CIS Bylaws. Such deferred
Contributions shall be paid by each Member for whom coverage is provided by the Loss
Fund in the Fund Year for which a deferred Contribution is required in the proportion
that each Member's initial Contribution bears to the total Contribution of all Members
for such coverage in the Fund Year.
(
5. Members shall be given not less than 6 (six) months' notice of such deferred
Contribution due under 2. or 4. above, and the amount thereof, prior to the beginning
of any fiscal year in which payment of such deferred Contribution is due.
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CITY /COUNTY INSURANCE SERVICES TRUST
APPLICATION OF AGGREGATE PAID LOSS DEDUCTIBLE
RULE NUMBER 3
The City/County Insurance Services Trust (CIS) adopts the following Rule regarding the
application of aggregate paid loss deductibles and retrospective rating plans for all Fund Years
beginning on or after July 1, 1987.
1. Paid losses shall be invoiced and paid quarterly. Amounts due under the deductible shall
be considered Contributions subject to the provisions of Articles 2.6.1 and 3.1.1 of the
CIS Bylaws.
2. For ease of administration, the liability deductible shall apply jointly to general and
automobile liability losses. The obligation of the Member to pay for losses shall cease
when the aggregate amount paid equals the amount of the deductible, regarding of the type
of the claims involved.
3. CIS and any Member with a deductible or retrospective rating plan may, by mutual
written agreement, agree to a liquidated value for the remaining payments due under the
( deductible.
4. Net Income Distribution which may be due to a Member pursuant to Rule Number 1 shall
be computed as if the Member had no deductible or retrospective rating plan. From
such distribution shall be deducted the savings, if any, resulting to the Member from the
deductible or retrospective rating plan. For liability coverage such savings shall be
computed by allocating the deductible between general liability and automobile liability
based on initial contributions, less paid losses for each coverage.
5. For liability coverage, Contributions and Loss Allocation pursuant to Rule Number 2 shall
be computed as if the Member had no deductible and the full amount of the initial
Contributions had been paid.
ADOPTED: 3-18-94
""." . ~
'---r-" ......-",--...----, ,,-- ._.....,-,--", . -....----... '-"'''''--'-''-'
(
CITY/COUNTY INSURANCE SERVICES
RULE 4
WORKERS' COMPENSATION DEFERRED CONTRIBUTION
City/County Insurance Services Trust (CIS) has deferred a portion of workers' compensation
Contributions for larger Members of the CIS Workers' Compensation Group. The following
policy sets forth the terms under which such deferred Contributions may be collected for all
Fund Years beginning on or after July 1, 1986.
1. Initial determination of the amounts to be collected shall be made at the end of the 30th
month of the Fund Year if the reserves are reasonably stable. However, the Trustees
may, in their sole discretion, select such later date as may be appropriate if the reserves
for some or all Members are subject to significant change.
2. If the Member's loss ratio is between 60 % and 100 %, the deferred Contribution due shall
be prorated. If the Member's loss ratio exceeds 100%, the entire deferred Contribution
shall be due.
3. Each Member shall be advised of the initial determination of the amount of deferred
Contribution calculated as due under Numbers 1 and 2 above.
4. The final determination of the amount of deferred Contribution due shall be made at the
end of the 36th month of the Fund Year, unless the initial determination shall have been
delayed under Number 1 above. In such case, the final determination shall be delayed
by a similar time.
5. No deferred Contribution shall be collected from a Member unless the Member shall
have been advised of the final amount due under Number 4 above six months prior to
the start of the Member's fiscal year in which the deferred Contribution is due.
6. For Fund Year 1986-87, for which deferred Contribution is contingent upon the loss ratio
of the entire group, the entire deferred Contribution may be collected if the group loss
ratio exceeds 60 %. The Trustees may, in their sole discretion, choose to collect less
than the entire amount due based on the group loss ratio.
ADOPTED 8/16/91
,~'. ...... ..~....."._- .......-.. "'" ,.........-.
(
\
CITY/COUNTY INSURANCE SERVICES TRUST
OPTIONAL DEFENSE BY MEMBER
RULE NUMBER 5
The City/County Insurance Services Trust (CIS) adopts the following Rule relating to Optional
Defense by Member, pursuant to Article 3.2 of the Trust Bylaws.
1. In any casualty case or claim where CIS staff or claims administrators reasonably believe
a Member will object to settlement, the following actions shall be taken:
a. The Member shall be advised in writing of the nature of the proposed settlement
and of the Trust's reasons, in summary, for recommending such settlement.
b. The Member shall be advised in writing of its right to refuse to accept the
settlement, on the terms set forth in the Trust Bylaws.
2. A Member electing to refuse a settlement shall execute an agreement with the Trust,
containing such terms and provisions as the Trust shall prescribe, accepting responsibility
for all additional costs as set forth in the Trust Bylaws.
3. The Member shall have the option of assuming the defense of the case or claim, in which
event the Trust shall tender to the Member such sum as was payable under the terms of
the settlement rejected by the Member. Otherwise, the Trust will continue to administer
the case or claim, and any associated legal defense, with all amounts expended
thereupon, in excess of the amount of the settlement rejected pursuant to this rule,
payable by the Member.
ADOPTED 8/16/91
"--T'",,-...---......---.,--..--,.-.--.-,.' .