AN ACT RELATING TO TOWNS AND CITIES -- COUNCILS AND GOVERNING BODIES (Requires a corporation created under this statute to be regulated by the Rhode Island department of business regulation.)

S2076

2026 -- S 2076
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO TOWNS AND CITIES -- COUNCILS AND GOVERNING BODIES

Introduced By:
Senators Rogers, de la Cruz, Pearson, Zurier, and E Morgan

Date Introduced:
January 16, 2026

Referred To:
Senate Commerce
It is enacted by the General Assembly as follows:
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SECTION 1. Section 45-5-20.1 of the General Laws in Chapter 45-5 entitled "Councils
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and Governing Bodies" is hereby amended to read as follows:
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45-5-20.1. Power of city and town councils and regional school districts to jointly
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establish an insurance corporation, to obtain insurance, and to enter into a cooperative risk
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management program.
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(a) Cities and town councils, school committees, water and fire districts may, through
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passage of a resolution, establish agreements between two (2) or more cities, town councils, school
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committees, and water and fire districts for obtaining for obtaining or effecting insurance by self
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insurance, for obtaining or effecting insurance from any insurer authorized to transact insurance in
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the state, or for obtaining and effecting insurance secured in accordance with any other method
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provided by law, or by combination and of the provisions of this section for obtaining and effecting
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insurance. Agreements made pursuant to this section may provide for pooling of self insurance
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reserves, risks, claims and losses, and of administrative expenses associated with the same, among
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local government units.
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(b) For purposes of this section the term “Eligible Entities” shall mean any city, town,
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school committee, water or fire district, or other public or quasi-municipal authority, agency or
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entity, or organization that is an instrumentality of such cities or towns, or any group of such cities
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or towns, authorities, agencies or entities which is a member of the corporations created pursuant
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to the provisions of this section.

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(c) To accomplish the purposes of this section any two (2) or more cities, towns, school
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committees, or water and fire districts, may authorize the creation of separate corporations (the
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“corporation”) for the purpose of: (1) issuing to the eligible entities policies of insurance and
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reinsurance of all types and categories, including, without being limited to, the following types and
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categories: property, casualty, and life, accident, and health insurance, and (2) developing and
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administering an interlocal risk management program. The corporations, in addition, may have as
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their purposes reducing the risk of its members; safety engineering; distributing, sharing, and
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pooling risks; acquiring excess loss insurance; and processing and defending claims against the
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members of the corporations. Any contributions made to the corporations for the purpose of
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distributing, sharing, or pooling risks shall be made on actuarially sound basis, and the corporations
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shall have an audit performed annually, copies of which shall be provided to the members of the
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corporations, and the auditor general; discrete accounts shall be kept for each risk management
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program developed and administered by the corporations.
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(d) The corporations shall not be considered an insurance company
and

but
shall
not
be
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subject to the provisions of the laws of the state of Rhode Island regulating insurance companies
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and therefore shall
in no way
be regulated by the Rhode Island department of business regulation.
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(e) The corporations created pursuant to the provisions of this section will be created by
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filing articles of incorporation pursuant to chapter 6 of title 7 entitled Rhode Island Nonprofit
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Corporation Act and the articles of incorporation will be filed by an incorporator/incorporators
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designated by the city, town councils, school committees, or water or fire districts, authorizing the
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creation of the corporation. The articles of incorporation creating the corporations pursuant to the
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provisions of this section may contain provisions, not inconsistent with this section, that the
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incorporators determine to be desirable or useful in fulfilling the purposes set forth in this section.
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The corporations created pursuant to the provisions of this section will have the powers of a
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nonprofit corporation created under chapter 6 of title 7 entitled Rhode Island Nonprofit Corporation
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Act including, without being limited to, the power to issue bonds, notes, and other obligations in
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any amounts and upon any terms that the corporation’s governing board determines.
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(f) The corporations created pursuant to the provisions of this section, notwithstanding the
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filing of its articles of incorporation pursuant to chapter 6 of title 7 entitled Rhode Island Nonprofit
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Corporation Act, (1) will be deemed to be public corporations, instrumentality, and agency of the
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state of Rhode Island acting for the benefit of the municipalities which are members of the
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corporations and its eligible entities but will not constitute a department of the government of the
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state of Rhode Island, and (2) will be deemed to be exercising public and essential governmental
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functions of the state of Rhode Island. No part of the net earnings of the corporations created

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pursuant to the provisions of this section will be distributable to, or inure to the benefit of, any
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private person. The members of the governing board of the corporations created pursuant to the
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provisions of this section will consist solely of chief executives, chief elected officials, finance
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directors, or treasurers of municipalities, or any other municipal officials that may be provided for
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in the bylaws of the corporations, and the members shall receive no compensation for the
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performance of their duties but each member may be reimbursed for his or her reasonable expenses
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incurred in carrying out their duties.
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(g) The bonds, notes, or other obligations issued by the corporations created pursuant to
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the provisions of this section will not be deemed to constitute a debt or liability or obligation of the
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state of Rhode Island or of any political subdivision of the state or of any municipality which is a
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member of the corporation but will be payable solely from the revenues or assets of the
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corporations.
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(h) Notwithstanding any provision of this chapter or special or general law to the contrary,
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each eligible entity which is a member of the corporations created pursuant to the provisions of this
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section will be authorized to enter into contracts with the corporations with respect to, among other
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matters, the payment of premiums and other payments, for terms not exceeding twenty-five (25)
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years in duration. To the extent that the obligation to pay premiums or make other payments under
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any contract is deemed to constitute the incurring of indebtedness by an eligible entity the contract
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may nevertheless be entered into without obtaining the approval of the electors of the city or town
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notwithstanding the provisions of §§ 45-12-19 and 45-12-20 and notwithstanding any provisions
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of the city’s or town’s charter or any special or general law to the contrary. Any contract may be
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entered into by an eligible entity either prior to or subsequent to the making of any appropriations
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which may be needed to carry out the obligations of the eligible entity under the contract.
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(i) The property and assets of the corporations created pursuant to the provisions of this
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section, the income of the corporations, and any bonds, notes, or other obligations issued by the
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corporation, their transfer, and the income from these (including any profits made on the sale
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thereof) will at all times be free from taxation by the state of Rhode Island or any political
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subdivision or other instrumentality of the state of Rhode Island, excepting inheritance, estate, and
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gift taxes with respect to the bonds, notes, or other obligations issued by the corporations.
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(j) Whenever the governing board of the corporations created pursuant to the provisions of
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this section determines that the purposes for which the corporations were created have been
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substantially fulfilled and all bonds, notes, or other obligations of the corporations have been fully
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paid or adequate provision has been made for their payment, the corporations may be dissolved in
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the manner provided for nonprofit corporations pursuant to chapter 6 of title 7 entitled Rhode Island

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Nonprofit Corporation Act and, upon the corporations’ dissolution, title to all funds and assets of
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the corporation shall vest in and become the property of the members of the corporation in
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proportions that are provided for in the corporation’s articles of incorporation.
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(k) No corporations created pursuant to the provisions of this section shall be required to
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pay any recording or filing fee or any transfer tax of any kind on account of papers or instruments
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recorded or filed by it or on its behalf.
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(l) No corporations created pursuant to the provisions of this section and no agent or broker
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acting on behalf of the corporations shall be required to pay a surplus line premium tax of any kind
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on premiums for any policies of insurance and reinsurance to or from the corporations.
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SECTION 2. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TOWNS AND CITIES -- COUNCILS AND GOVERNING BODIES
***
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This act would require a corporation created under this statute to be regulated by the Rhode
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Island department of business regulation.
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This act would take effect upon passage.
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