1 The situation is persuasively described in the preamble to the West Virginia law on state insurance:Google Scholar

Recognition is given to the fact that the State of West Virginia owns extensive properties of varied types and descriptions representing the investment of vast sums of money; that the State and its officials, agents and employees engage in many governmental activities and services and incur and undertake numerous governmental responsibilities and obligations; that such properties are subject to losses, damage, destruction, risks and hazards and such activities and responsibilities are subject to liabilities which can and should be covered by a sound and adequate insurance program; and that good business and insurance practices and principles necessitate the centralization of responsibility for the purchase, control and supervision of insurance coverage on all state properties, activities and responsibilities and the cooperation and coordination of all state officials, departments and employees in the development and success of such a centralized state insurance program. Wherefore, in order to accomplish these desired ends and objectives, the provisions of this article are hereby enacted into law in response to manifest needs and requirements therefor and in the interest of the establishment and development of an adequate, economical and sound state insurance and bonding service on all state property, activities and responsibilities.Google Scholar

W. Va. Code sec. 29-12-1 (1976).Google Scholar

2 The connection is most clearly demonstrated by a 1973 Montana law designated: Comprehensive State Insurance Plan and Tort Claims Act. Mont. Rev. Codes Ann. sec. 82–4301, created by ch. 380, 1973 Mont. Laws.Google Scholar

3 For details, see p. 285 & note 108 infra.Google Scholar

4 See the description by Stanley R. Tarr, The Exposures to Loss, Risk Management, July 1975, at 21.Google Scholar

5 General treatments of risk management include: Robert I. Mehr & Bob A. Hedges, Risk Management: Concepts and Applications (Homewood, Ill.: Richard D. Irwin, 1974); H. Wayne Snider, ed., Risk Management (Homewood, Ill.: Richard D. Irwin, 1964); Robert C. Goshay, Corporate Self-Insurance and Risk Retention Plans (Homewood, Ill.: Richard D. Irwin, 1964). Special aspects are discussed regularly in the magazine Risk Management and in other publications of the Risk and Insurance Management Society (RIMS).Google Scholar

6 This is not the place for a detailed discussion of governmental bankruptcies–a challenging subject in its own right. For recent surveys of the legal situation of municipalities facing financial difficulties, see American Bar Association, National Institute on Freedom from Fiscal Fiasco, Washington, D.C., Dec. 2, 3, 1976; and the symposium in 1976 Duke L.J. 1051.Google Scholar

7 The first extensive survey covered 125 cities in Kansas and in other parts of the United States and even abroad and included a thorough and objective discussion of all relevant issues. Orin F. Nolting, Municipal Insurance: A Survey of the Practices of Cities in Insuring Their Property and Liability Risks, Bull. No. 63 (published jointly by the International City Managers' Association, the League of Kansas Municipalities, and the Municipal Reference Bureau, University Extension Division, University of Kansas, Lawrence, 1927). For a recent nationwide survey of 1,709 municipalities, see Governmental Risk Management, Urban Data Service, Feb. 1973. A list of more surveys that have come to the author's attention is presented in appendix 1.Google Scholar

8 Four surveys have been conducted on a national level by the Association of School Business Officials of the United States and Canada (formerly the National Association of Public School Business Officials) at roughly 10-year intervals: Bull. No. 2 (1932), covering 380 cities in the U.S. and Canada, 1921-30; Bull. No. 9 (1941), covering 257 cities in the U.S., 1931-37; Bull. No. 11 (1948), covering 142 districts in the U.S., 1938-45; Bull. No. 18 (1958), covering 378 districts in the U.S. and Canada, 1946-55. Another nationwide survey was conducted by the U.S. Department of Health, Education and Welfare: N. E. Viles, Sr., School Property Insurance: Experiences at State Level, Office of Education Bull. 1956, No. 7 (Washington, D.C.: Government Printing Office, 1956). In addition, there are surveys of the practices in individual states. Some of them are listed in appendix ².Google Scholar

9 The magazine Municipal Finance, which is published by the Municipal Finance Officers Association, has devoted entire issues to risk management. See the May 1963 issue, Municipal Insurance, and the Aug. 1971 issue, Risk Management. Also, RIMS, which includes a considerable number of states, municipalities, and other government agencies among its members, has devoted special issues of its journal, Risk Management, to governmental risk management. See the Nov. 1974 issue, Governmental Risk Management, and the July 1975 issue, Managing Risk in the University. Risk management problems of schools have been discussed in articles and special issues of School Business Affairs, the journal of the Association of School Business Officials. See the June 1975 issue. Under the aegis of the Municipal Finance Officers Association and the International City Managers Association, Professors Nestor R. Roos and Joseph S. Gerber of the University of Arizona have conducted seminars on governmental risk management annually for the past ten years.Google Scholar

Books on municipal risk management include: Jerry D. Todd, Effective Risk and Insurance Management in Municipal Government, Public Affairs Series No. 82 (Austin: University of Texas, Institute of Public Affairs, 1970); Georgia Chapter, Society of Chartered Property and Casualty Underwriters, Municipal Risk Management (Cincinnati, Ohio: National Underwriter Co., 1974). On school risk management, see, in addition to the surveys cited in note 5 and appendix 2: Henry H. Linn & Schuyler C. Joyner, Insurance Practices in School Administration (New York: Ronald Press Co., 1952).Google Scholar

10 See, e.g., the following accounts of the experiences of individual governments: Wilfred Greene, Canadian Insurance Practices, Municipal Finance Officers Association Special Bull. No. 1953 H (Chicago, 1953) (New Westminster, B.C., Canada); Alfred N. Premo, What Kinds and Amounts of Insurance Protection, id. (Hartford, Conn.); B. Felix Harris, Obtaining Lowest Premium Costs and Maximum Coverages, id. (Texas); T. J. Millisack, Municipal Insurance Program Developed and Operated Through Agents' Cooperation (Chicago: American Municipal Association, 1955) (Denver, Colo.); Howard J. McNamara, Jr., Re-Evaluation of the General Insurance Program of a Municipality, 35 Municipal Finance 155 (1963) (Baltimore, Md.); John A. Collins, A Self-Insurance Program: Detroit's Insurance Reserve Fund, id. at 161; James C. King, Competitive Bidding for Municipal Insurance, id. at 166 (Mount Prospect, Ill.); K. H. Allyn, Preparation of Bid Specifications for Insurance, id. at 170 (Coral Gables, Fla.); Michael G. Allen, Insurance Purchasing Through an Insurance Advisory Committee, Popular Government, Nov. 1965, at 9 (Charlotte and Mecklenburg County, N.C.); Donald R. Schieck, Practicing Risk Management at the State Level… It Works, Risk Management, Oct. 1975, at 42 (Illinois).Google Scholar

11 See, e.g., Kermit Almstedt, Municipal Insurance Practices-Violations of Antitrust Laws, Mo. Municipal Rev., Feb. 1976, at 4.Google Scholar

12 For instance, there was considerable publicity in 1973 when the City of Chicago transferred a large insurance account from one insurance agency to another shortly after the mayor's son had joined the new agency as a partner. See Richard J. Donahue, Another Insurance Sensation Pops Out in the Chicago Press, Nat'l Underwriter, Prop./Casualty Ins. Ed., Feb. 23, 1973.Google Scholar

13 See, e.g., Montana Legislative Council, Self-Insurance on State-Owned Property, A Report to the Forty-Second Legislative Assembly, Rep. No. 30, Dec. 1970, at 23 (referring to the history of the 1935 legislation establishing a state insurance fund; it had been found that between 1923 and 1933 the state had received $1.00 in loss payments for every $37.00 paid as premiums).Google Scholar

14 See, e.g., L. F. Edwards, Insurance Costs: Up and Almost Away, Nation's Schools, Feb. 1970, at 51; Illinois, Office of the Superintendent of Public Instruction and Department of Insurance, Report of the School Insurance Advisory Committee, Apr. 1972.Google Scholar

15 See, e.g., Tennessee, Legislative Council Committee, Study on State Self-Insurance, 1966: Final Report of the Legislative Council Committee, FR-1966-B8. Self-Insurance on State-Owned Property, supra note 13; George D. Smith, Fire Insurance Coverage for Washington School Districts: A Report of the Bureau of Governmental Research and Service (Seattle: University of Washington, 1951); Report of the Florida Public School Self-Insurance Study Committee, Jan. 15, 1969, State Treasurer and Insurance Commissioner, Tallahassee, Fla.Google Scholar

Proposals for state-administered school insurance plans have been a popular subject of doctoral dissertations in education: Edmund C. Martin, An Analysis and Evaluation of Property Insurance Practices and Procedures of Georgia Public Schools (University of Georgia, 1964); George E. Taylor, Fire Insurance on Public School Property in Pennsylvania (Pennsylvania State University, 1958); Frank P. Leathers, School Property Insurance in Texas (University of Texas, 1960); Wayne L. Cleveland, Fire Insurance Practices in South Dakota Independent School Districts: An Analysis and Possible Improvements (University of South Dakota, 1964); Harry A. Marmion, Insurance Programs in Public School Districts in Connecticut (University of Connecticut, 1965); Bruce Howard, Public School Insurance Programs in the State of Utah (Arizona State University, 1965); Donald S. Stuart, A Proposed State-Operated Property Insurance Program for New Mexico (New Mexico State University, 1969); William R. Brown, Jr., A Comparison of the Seven Major Fire and Extended Coverage Insurance Plans for Public School Buildings as Applicable to Mississippi (University of Mississippi, 1971); Robert B. Froehlich, An Analysis of the Determinants of Property Insurance Rates in Selected Nebraska Public School Districts from 1965 Through 1970 (University of Nebraska, 1971); Jack G. Nichols, Self-Insurance for the Public Schools of Tennessee: A Feasibility Study (University of Tennessee, 1971); Ben R. Larson, A Study to Determine the Feasibility of a State-Operated Property Insurance Program for Washington Public Schools (Washington State University, 1972).Google Scholar

16 See, e.g., the reports cited in the beginning of note 15.Google Scholar

17 For details of the development, see, e.g., the Symposium on Sovereign Immunity and Public Responsibility, in 1966 U. Ill. L. Forum 795-1059; National Association of Attorneys General, Committee on the Office of Attorney General, Sovereign Immunity: The Liability of Government and Its Officials (Jan. 1975).Google Scholar

18 For a discussion of the problems associated with insuring government liability, see Allen E. Smith, Insurance and the Texas Tort Claims Act, 49 Tex. L. Rev. 445 (1971). The mere fact that liability insurance involves three parties instead of two creates many legal and practical difficulties.Google Scholar

19 See, e.g., Ill. Rev. Stat. ch. 85, sec. 2-302 (1975), which authorizes, but does not direct, local governments to back up their employees against liability claims:Google Scholar

If any claim or action is instituted against an employee or former employee of a local public entity based on an injury allegedly arising out of an act or omission occurring within the scope of his employment as such employee, the entity may elect to do any one or more of the following:Google Scholar

a) Appear and defend against the claim or action;Google Scholar

b) Indemnify the employee or former employee for his court costs incurred in the defense of such claim or action;Google Scholar

c) Pay, or indemnify the employee or former employee for a judgment based on such claim or action, orGoogle Scholar

d) Pay, or indemnify the employee or former employee for, a compromise or settlement of such a claim or action.Google Scholar

20 For descriptions and discussions of government insurance programs, see Robert J. Myers, Social Security and Allied Government Programs (rev. ed. Homewood, Ill.: Richard D. Irwin, 1975); David McCahan, State Insurance in the United States (Philadelphia: University of Pennsylvania Press, 1929); Mark R. Greene, Government and Private Insurance (Des Plaines, Ill.: National Association of Independent Insurers, 1975).Google Scholar

21 See pp. 299-308 infra.Google Scholar

22 Some insurance companies are now actively promoting their services in this field. For instance, the Insurance Company of North America (INA) has prepared a small brochure entitled “Self-Insurance: Some Professional Considerations,” in which it emphasizes the advantages of risk retention and offers its assistance not only for excess coverage but also for administrative services. This is in stark contrast to the traditional attitude of insurance trade associations and especially agents organizations, which have opposed self-insurance plans or at least warned against their dangers. See Percy F. Garnett, The History of Various State Insurance Experiments (San Francisco: Board of Fire Underwriters of the Pacific, 1939); George S. Hanson, State and Municipal Self-Insurance (New York: National Association of Insurance Agents, 1953).Google Scholar

23 See note 108 infra.Google Scholar

24 According to the July 1976 membership roster, the following federal agencies are members of RIMS: Bureau of Naval Personnel, Department of the Navy; Federal National Mortgage Association; Headquarters, Department of the Army; Rural Electrification Administration; Smithsonian Institution; U.S. Energy Research and Development Administration; Air Force Central Welfare Fund; Navy Resale System Office. Risk and Insurance Management Society, Inc., Roster of Member Companies, July 1976. RIMS members include not only insurance buyers but also some insurance carriers. The Federal National Mortgage Association should belong in the latter category.Google Scholar

25 See, e.g., Ala. Code tit. 12, sec. 12(23) (Cum. Supp. 1973) (counties), tit. 52, sec. 101 (1958) (schools); Ariz. Rev. Stat. sec. 11-251(15) (Cum. Supp. 1976-77) (counties); Cal. Gov't Code secs. 25361 (West 1968) (counties), 54462 (West 1966) (municipal enterprises); Colo. Rev. Stat. secs. 29-4-225 (housing authorities), 28-2-404 (1973) (disaster emergency exercises); Fla. Stat. Ann. secs. 219.02(3) (West 1971) (counties, public money), 230.23(9)(d) (West 1977) (school plant and buses); Ga. Code Ann. sec. 91-603 (1971) (counties, statute books, and court reports); N.J. Stat. Ann. secs. 40:51-1 to 40:51-11 (West 1967) (a special chapter dealing with the insurance of municipal risks). The list can be extended to most of the other states; the examples given here should suffice to show that there is no uniform or consistent approach. Some of the statutes, rather than authorizing the making of insurance contracts, refer to the spending of public funds for paying insurance premiums, or to the use of the proceeds of insurance contracts for the reconstruction of damaged buildings, or for other purposes. See, e.g., Fla. Stat. Ann. sec. 255.01 (West 1975). Provisions of this kind imply an authorization to purchase insurance.Google Scholar

26 See, e.g., Ga. Code Ann. sec. 56-2437 (1971); Idaho Code sec. 31-814 (1963); Ky. Rev. Stat. sec. 67.180 (1970); W. Va. Code sec. 6-12-1 (Cum. Supp. 1976).Google Scholar

27 See, e.g., Fla. Stat. Ann. sec. 455.06 (West Cum. Supp. 1977); Idaho Code sec. 6-923 (Cum. Supp. 1976); III. Rev. Stat. ch. 85, sec. 9-103 (1975).Google Scholar

28 See notes 17, 18 supra.Google Scholar

29 See, e.g., Clark School Township v. Home Ins. & Trust Co., 20 Ind. App. 543, 51 N.E. 107 (1898); King County v. U.S. Merchants' & Shippers' Ins. Co., 150 Wash. 626, 274 P. 704 (1929). Other cases are cited in the Annot. 100 A.L.R. 600 (1936). The notion of an implied authority to purchase insurance coverage for public property is inferentially confirmed by statutes that expressly prohibit insurance purchases in order to implement a policy of noninsurance or self-insurance. They are discussed in detail infra.Google Scholar

30 King County v. U.S. Merchant's & Shippers' Ins. Co., 150 Wash. 626, 274 P. 704 (1929), for instance, concerned ferry boats and other vessels owned by the county.Google Scholar

31 See, e.g., 1971 Op. Att'y Gen. Ohio, no. 71-028, June 4, 1971; Op. Att'y Gen. Minn., Nov. 22, 1954, 1955 Ins. L.J. 114. The problem is, of course, that purchase of liability insurance could be interpreted as a waiver of immunity. Some statutes that authorize liability insurance therefore expressly state that immunity shall not be considered to be waived.Google Scholar

32 See the surveys cited note 7 supra and in appendix 1 infra.Google Scholar

33 See, e.g., Cal. Gov't Code sec. 11007.7 (West 1966); Colo. Rev. Stat. sec. 24-30-402(2)(a) (1973); Fla. Stat. Ann. sec. 287.022 (West 1975); La. Rev. Stat. Ann. sec. 39:171 (West Cum. Supp. 1977); N.H. Rev. Stat. Ann. sec. 8:19(IX) (1970); Am. House Bill 917, 1976 Ohio Legis. Serv. 4-29 (Baldwin) (to be codified as Ohio Rev. Code Ann. sec. 125.03); R.I. Gen. Laws sec. 37-11-1 (1969); Wyo. Stat. sec. 9-276.18:69(a) (Cum. Supp. 1975).Google Scholar

34 See p. 278 & notes 88, 89 infra.Google Scholar

35 See, e.g., Alaska Stat. sec. 37.05.220(1) (1976) (“purchase, rent, or otherwise provide for the furnishing of supplies, materials, equipment, or contractual services for all state agencies”).Google Scholar

36 For instance, under Am. House Bill 917, 1976 Ohio Legis. Serv. 4-29 (Baldwin) (to be codified as Ohio Rev. Code Ann. sec. 125.03), certain kinds of coverage (specifically automobile liability insurance) for the benefit of state officers or employees is to be procured by the central purchasing department only if the premium amounts to more than $1,000 per year; and under sec. 125.06 (1974) of the same code the jurisdiction for insurance purchases (and certain other transactions) reverts to the individual agency if the central purchasing office determines that procurement through it would be impractical.Google Scholar

37 See pp. 276-77 infra.Google Scholar

38 Ill. Rev. Stat. ch. 127, sec. 35.9 (as amended by P.A. 79-1331, July 28, 1976). A similarly detailed list specifies the functions of the Maine Insurance Advisory Board. Me. Rev. Stat. tit. 5, sec. 1725 (Supp. 1973). Also noteworthy is the description of the Wisconsin statewide risk management coordination program in Wis. Stat. Ann. sec. 16.865 (West Cum. Supp. 1976-77), which places much weight on planning and education:Google Scholar

16.865 Department of administration; statewide risk management coordination The department shall:Google Scholar

(1) Be responsible for statewide risk management coordination in order to:Google Scholar

(a) Protect the state from losses which are catastrophic in nature and minimize total cost to the state of all activities related to the control of accidental loss.Google Scholar

(b) Place emphasis on the reduction of loss through professional attention to scientific loss control techniques and by motivational incentives, prompt claims payments and other loss prevention measures.Google Scholar

(2) Identify and evaluate exposure to loss to the state, its employes or injury to the public by reason of fire or other accidents and fortuitous events at state-owned properties or facilities.Google Scholar

(3) Recommend changes in procedures, program conditions or capital improvement for all departments which would satisfactorily eliminate or reduce the existing exposure, and coordinate state safety programs for all departments with the assistance of the state safety council.Google Scholar

(4) In cooperation with the commissioner of insurance, arrange appropriate insurance contracts for the transfer of the remaining risk of loss on the part of the state or its employes, to the extent such loss cannot reasonably be assumed by the individual departments, to the appropriate state insurance fund. If the commissioner of insurance concurs that coverage is not available through the state insurance fund then the department shall procure for the departments such necessary coverage from a commercial insurer, The department shall provide assistance necessary in all technical aspects of arrangements with commercial insurers. The placement of insurance may be by private negotiation rather than competitive bid if such insurance has a restricted number of interested carriers and has been the subject of competitive bid within the preceding 6 years. All insurance purchases shall require the approval of the department.Google Scholar

(5) Train, upgrade and guide appropriate personnel in the departments in implementation of sound risk management practices.Google Scholar

39 In addition to the statutes of the states mentioned in note 38, the following statutes can be counted in the comprehensive category: Ariz. Rev. Stat. sec. 41-621 (Cum. Supp. 1976-77); Del. Code tit. 18, sec. 6502 (1974); Haw. Rev. Stat. sec. 41-4 (1968); Idaho Code sec. 67-5754 (Cum. Supp. 1976); Kan. Stat. secs. 4103, 4104, 4107, 4111, 4112 (1969), 4101, 4102, 4105, 4106, 4108-4110, 4113, 4114 (Cum. Supp. 1976); Or. Rev. Stat. secs. 278.005-.135 (1975); Tenn. Code Ann. secs, 4-327(7) (Cum, Supp. 1976), 12-339 (1973); W. Va. Code secs. 29-12-1 to 29-12-11 (1976).Google Scholar

40 See, e.g., Conn. Gen. Stat. Ann. sec. 4-37b (West 1969); N.J. Stat. Ann. sec. 52:27B-62 (West 1955); Vt. Stat. Ann. tit. 29, sec. 1401 (1970); Wash. Rev. Code Ann. sec. 43.19.1935 (1970); Wyo. Stat. sec. 9-276.18:69(1), (m), (n) (Cum. Supp. 1975).Google Scholar

41 See, e.g., Ga. Code Ann. secs. 91-132, 91-133 (1971); Md. Ann. Code art. 95, secs. 25, 26 (Cum. Supp. 1976); Mont. Rev. Codes Ann. sec. 78-1102 (Cum. Supp. 1975); Nev. Rev. Stat. sec. 353.270 (1975); Okla. Stat. Ann. tit. 74, secs. 61 (West Cum. Supp. 1976-77), 63 (West 1965); Va. Code sec. 2.1-109.6 (Cum. Supp. 1976).Google Scholar

42 See, e.g., Cal. Gov't Code sec. 11007.7 (West 1966); N.H. Rev. Stat. Ann. secs. 8:19(IX) (1970), 93-B:2 (Supp. 1975). Under the latter, insurance purchases are made by the director of purchase and property with the approval of a board consisting of the attorney general, the secretary of the tax commission, and the bank commissioner; the insurance commissioner is to furnish advice and information.Google Scholar

43 This includes all the states mentioned in notes 33, 3841 supra, except Delaware and Florida. For the latter, see notes 45, 46 infra.Google Scholar

44 For details on the funds, see table 1 infra.Google Scholar

45 Fla. Stat. Ann. sec. 284.40 (West 1975). The purchasing function, however, has remained with the division of purchasing. Id. sec. 287.022.Google Scholar

46 Del. Code tit. 18, sec. 6505 (1974).Google Scholar

47 Va. Code sec. 2.1-109.6(b) (Cum. Supp. 1976). Similarly, the Delaware insurance coverage director is required to “employ all resources available to him in the Coverage Office, the Insurance Department, the office of the State Fire Marshal, the Justice Department, and the Auditor's Office before retaining independent contractors….” Del. Code tit. 18, sec. 6542 (1974).Google Scholar

48 Mont. Rev. Codes Ann. sec. 78-1103 (Cum. Supp. 1975).Google Scholar

49 Nev. Rev. Stat. sec. 353.270(2) (1975).Google Scholar

50 Del. Code tit. 18, sec. 6502 (1974).Google Scholar

51 Kan. Stat. sec. 75-4101 (Cum. Supp. 1976).Google Scholar

52 Conn. Gen. Stat. Ann. sec. 4-37a (West 1969).Google Scholar

53 Me. Rev. Stat. tit. 5, sec. 1725 (Supp. 1973).Google Scholar

54 Va. Code sec. 2.1-109.7 (Cum. Supp. 1976).Google Scholar

55 W. Va. Code sec. 29-12-3 (1976). The insurance commissioner serves as secretary with-out vote, and is required to make available the information, facilities, and services of his office.Google Scholar

56 See, e.g., Ariz. Rev. Stat. sec. 41-621(C) (Cum. Supp. 1976-77); the statute goes on to provide that a provider of risk management services may be compensated only by a fee and may not receive directly or indirectly any commission on the sale of insurance. Id. sec. 41-621(D), (E). See also Fla. Stat. Ann. sec. 284.33 (West 1975).Google Scholar

57 Tenn. Code sec. 12-339 (1976).Google Scholar

58 The program is the result of a study conducted by the Legislative Council Committee in 1966. Study on State Self-Insurance, 1966, supra note 15.Google Scholar

59 See the Tennessee study cited supra note 15 and Self-Insurance on State-Owned Property, supra note 13.Google Scholar

60 See, e.g., Ind. Code Ann. sec. 18-4-7-4 (Burns 1974) (purchasing agent for cities also responsible for insurance); Nev. Rev. Stat. sec. 332.115(1)(e) (1975) (central purchasing act for local governments-insurance exempt from bidding procedures). See also the statutes cited in note 139 infra authorizing municipalities to establish reserve or insurance funds for property losses.Google Scholar

61 See, e.g., Colo. Rev. Stat. sec. 24-30-402(3) (1973).Google Scholar

62 See notes 7, 8 supra.Google Scholar

63 Roster of Member Companies, supra note 24. A membership survey published in July 1976 lists nonprofit organizations as the second largest member group. These organizations include: 34 cities; 23 counties; 20 state or provincial governments or agencies; 17 special districts; 8 school districts; 8 federal government units; 43 educational institutions; 12 religious bodies; 7 charitable groups; 4 foundations; 2 professional associations; 2 hospitals. Lester B. Strickler, RIMS Today: Who? What? Where? Risk Management, July 1976, at 58.Google Scholar

64 See note 10 supra.Google Scholar

65 See, e.g., Del. Code tit. 18, sec. 6520 (1974); W. Va. Code sec. 29-12-7(b) (1976). However, Idaho Code sec. 67-5755(1)(c) (Cum. Supp. 1976) also permits the risk manager to obtain coverages under the surplus lines law.Google Scholar

66 See, e.g., Vt. Stat. Ann. tit. 29, sec. 1402 (1970):Google Scholar

[T]he purchasing director shall give preference to Vermont-domiciled companies and independent agents licensed in and resident in Vermont when consistent as to coverages, services and the best interests of the state. Nothing contained herein shall be considered or construed as meaning or intending to be more than a legislative declaration of intent and policy, and in effecting the intent and policy herein expressed, the decisions and actions of the department shall not be subject to judicial challenge.Google Scholar

See also People v. Stanley, 193 Cal. 428, 225 P. 1 (1924), discussing a California statute limiting the power of school trustees and city boards of education to purchase insurance from domestic companies only.Google Scholar

67 See, e.g., 69 Op. Att'y Gen. Ala. 23 (Oct. 22, 1952); Op. Att'y Gen. Fla., April 6, 1950 (state), and June 10, 1951 (county school boards); Op. Att'y Gen. Idaho, Sept. 13, 1946, 1946 Ins. L.J. 744; Op. Att'y Gen. Kan., Dec. 6, 1957, 1958 Ins. L.J. 347; 1955-56 Op. Att'y Gen. Me. 79; Op. Att'y Gen. Minn., Mar. 15, 1951, 1951 Ins. L.J. 455 (cities for purchases exceeding $500, for which bids must be obtained; a later opinion dated Nov. 21, 1951 permitted the purchase of assessable policies for public housing projects); Op. Att'y Gen., No. 222, Nev. Dec. 3, 1952.Google Scholar

68 Ohio Const. art. 8, sec. 6:Google Scholar

No laws shall be passed authorizing any county, city, town or township … to become a stockholder in any joint stock company, corporation, or association whatever; or to raise money for, or to loan its credit to, or in aid of, any such company, corporation, or association: provided, that nothing in this section shall prevent the insuring of public buildings or property in mutual insurance associations or companies.Google Scholar

It should be noted that the proviso is not limited to nonassessable companies or policies, and it has consequently been interpreted to permit a municipality to grant a lien on the property of its transit system in order to secure its contingent assessment liability. Burt v. City of Cleveland, 76 Ohio App. 451 (1945).Google Scholar

69 Op. Att'y Gen. Minn., Mar. 15, 1951, 1951 Ins. L.J. 455.CrossRefGoogle Scholar

70 193 Ky. 171, 235 S.W. 360 (1921).Google Scholar

71 The court rejected this argument by referring to a statute defining the term “person” to include corporations and by pointing out that although by statute the directors must be chosen from among the members, that did not require all members to be eligible to be directors (who must be natural persons). Id., 235 S.W. at 363.Google Scholar

72 In response to this argument, the court described the rules and procedures and limits under which the company determined assessments and concluded that the maximum contingent liability for the board under this policy was $846, which was less than the difference between the premium paid by the board to the company and the premium charged for the same coverage by a stock insurance company. The court also noted that in view of the financial resources and the experience of the company the probability of an assessment was so low as to amount to pure conjecture. Id., 235 S.W. at 363-64.Google Scholar

73 The court referred to several precedents to the effect that (laborers' and mechanics') liens on public property were unenforceable as against public policy and could only be construed to apply to the funds set aside for the payment of the respective debts. It concluded that this rule also applied to the mutual insurance company's lien and that the contract had to be interpreted accordingly. Id., 235 S.W. at 364.Google Scholar

74 See the statutes cited note 33 supra; also Ariz. Rev. Stat. secs. 41-621(C), 41-730 (Cum. Supp. 1976-77); Fla. Stat. Ann. sec. 287.022(1) (West 1975).Google Scholar

75 See especially Del. Code tit. 18, secs. 6520-6522 (1974).Google Scholar

76 See, e.g., Nev. Rev. Stat. sec. 332.115(1)(e) (1975), which exempts insurance contracts from the competitive bidding requirements of the central purchasing act for local governments.Google Scholar

77 N.H. Rev. Stat. Ann. sec. 8:19(XV) (1970).Google Scholar

78 For details, see, e.g., Robert M. Bieber, Developing Bid Specifications, Risk Management, Nov. 1974, at 9.Google Scholar

79 Some states consequently require competitive bidding only for insurance contracts (as indeed for any purchases) involving premiums in excess of a specified amount. See Ariz. Rev. Stat. sec. 41-730 (Cum. Supp. 1976-77) ($5,000-the amount was increased from $1,000 in 1976); Am. Sen. Bill 430, 1970 Ohio Legis. Serv. 4-128 (Baldwin) (to be codified as Ohio Rev. Code Ann. sec. 125.07) ($1,000).Google Scholar

80 See, e.g., the references in Donahue, supra note 11.Google Scholar

81 See Illinois State Property Insurance Study Commission, April 1975 Interim Report to the Governor and the 79th General Assembly 10-12.Google Scholar

82 Recent legislation in Arizona demonstrates the struggle between proeconomy and proagent forces. A law enacted in 1974 (ch. 205, sec. 3, 1974 Ariz. Sess. Laws) amending Ariz. Rev. Stat. sec. 41-621(D), provided that “[a] 11 contingent commissions, excess profits commissions or other commissions that may be based upon losses or experience that a successful bidder for the sale of insurance to the state may be eligible to receive from insurance carriers or underwriters shall be paid by such successful bidder to the state of Arizona.” In 1975, this provision was replaced by a new statute that only prohibits the payment of such commissions to persons who have not performed actual services for the successful bidder. Ariz. Rev. Stat. sec. 41-624 (Cum. Supp. 1976-77), created by ch. 102, sec. 18, 1975 Ariz. Sess. Laws.Google Scholar

83 See, e.g., Conn. Gen. Stat. Ann. sec. 4-37b (West 1969), which provides for the appointment of an agent of record. See also the statutes cited note 85 infra.Google Scholar

84 The Connecticut state insurance purchasing board is expressly authorized to negotiate the agent's commission. Conn. Gen. Stat. Ann. sec. 4-37b (West 1969). In fiscal year 1972-73, the agent of record received commissions in the amount of $166,666 on total premiums of $1,944,433, representing a rate of 6 percent. Tenth Annual Report of the State Insurance Purchasing Board, Fiscal Year 1972-73. In the absence of more detailed information about the services performed by the agent, it is difficult to compare this rate to the commission rates prevailing in the private sector. It does not seem to be completely out of line.Google Scholar

85 See, e.g., N.H. Rev. Stat. Ann. sec. 8:19(IX) (1970), which prohibits the payment of any part of the commission to a nonresident agent or nonresident broker; N.D. Cent. Code sec. 26-24-22 (1970), which even requires that the reinsurance contract of the state fire and tornado fund be negotiated through and countersigned by a licensed resident agent.Google Scholar

86 W. Va. Code sec. 29-12-7(c) (1976) provides that no more than 5 percent of the total premium volume may be placed through any one agent or agency, nor more than 15 percent through agencies in any one county. This requirement is in no apparent way related to the location of the insured risks or the ability of the agents to service them.Google Scholar

87 Va. Code sec. 2.1-109.6(bl) (Cum. Supp. 1976).Google Scholar

88 See, e.g., Tenn. Code Ann. sec. 12-346 (1973). La. Rev. Stat. Ann. sec. 39:171.2(A) (West Cum. Supp. 1977) does not require but only authorizes the state to deal directly with insurers, in which case the amount of the premium is to be reduced by the commission that would otherwise have been paid. If the business is placed through an agent, he may credit or pass on any part of the commission to the state. Fla. Stat. Ann. sec. 287.022(2) (West 1975) requires only reporting of commission payments.Google Scholar

89 Pa. Stat. Ann. tit. 71 sec. 634.1 (Purdon Cum. Supp. 1976-77); Ala. Code tit. 28, sec. 321 (Cum. Supp. 1973).Google Scholar

90 In extreme cases, the dependence can amount to a delegation to the agent of the discretion what kinds and amounts of coverage to purchase-a delegation that is not permitted by law. See 1965-66 Op. Att'y Gen. Wash. no. 54.Google Scholar

91 Almstedt, supra note 11. The investigation was based on expanded powers created by a recent (1974) revision of the Missouri antitrust law. See Kermit W. Almstedt & Richard B. Tyler, State Antitrust Laws: New Directions in Missouri, 39 Mo. L. Rev. 489 (1974). A similar campaign had been conducted in 1973 against school districts, and had resulted in the signing of assurances of compliance by all 108 Missouri school districts. Both investigations were triggered by numerous complaints of insurance companies and “outside” agents who had been excluded from competing with the insiders for the municipal and school business. Almstedt, supra note 11, at 4. See also Mo. Will Investigate Municipal Ins. Purchases, Nat'l Underwriter, Prop./Casualty Ins. Ed., Aug. 22, 1975, at 33, col. 1, referring to disclosures in the St. Louis Post-Dispatch that some agents shared in commissions while serving as members of a town advisory committee.Google Scholar

92 Almstedt, supra note 11, at 5-6.Google Scholar

93 See, e.g., Calls Municipal Ins. Buying Probe in Mo. “Fishing Expedition,” Nat'l Underwriter, Prop./Casualty Ins. Ed., Oct. 10, 1975, at 45, col. 1; and Holdout Town Gives Insurance Data to Mo. Attorney General, Nat'l Underwriter, Prop./Casualty Ins. Ed., Nov. 14, 1975, at 22, col. 4.Google Scholar

94 317 U.S. 341 (1943).Google Scholar

95 15 U.S.C. secs. 1011-1015 (1970).Google Scholar

96 See, e.g., Paul E. Slater, Antitrust and Government Action: A Formula for Narrowing Parker v. Brown, 69 Nw. U.L. Rev. 71, 89-90 (1974), referring to a dictum in Reid v. University of Minn., 107 F. Supp. 439, 443 (N.D. Ohio 1952) to the effect that the state action doctrine is not applicable where a state or a political subdivision acts in a proprietary capacity.Google Scholar

97 The various dangers-along with the advantages-of self-insurance of government risks were already pointed out in detail by Nolting, note 7 supra. See also notes 98, 100 infra.Google Scholar

98 See especially Nolting, supra note 7; Garnett, supra note 22; Hanson, supra note 22; Todd, supra note 9; Self-Insurance on State-Owned Property, supra note 13, at 9-21.Google Scholar

99 See Howard Kunreuther, Limited Knowledge and Insurance Protection, 24 Pub. Pol'y 227 (1976).Google Scholar

100 An illustration is provided by the history of the North Dakota State Fire and Tornado Fund, which was established in 1919 and at that time was designed to accumulate a reserve of 10 percent of the total risk. The percentage was reduced to 5 percent in 1927; in 1931 the limit was set at $2,000,000, which was reduced to $1,500,000 in 1935. In 1943, the figure was increased to $3,000,000, in 1944 it was reduced to $2,000,000, and in 1947 it was again increased to $4,000,000. See Hanson, supra note 22, at 33. Since 1963, the limit has been at $12,000,000. N.D. Cent. Code sec. 26-24-13 (1970).Google Scholar

101 This has occurred to the Wisconsin state insurance fund, out of which between 1955 and 1967 a total of $11,500,000 was transferred to the general fund; in addition, a loan in the amount of $1,700,000 was made. For details, see 1974 Wisconsin Insurance Commissioner's Report (Business of 1973) 32; Spencer L. Kimball, Insurance and Public Policy: A Study in the Legal Implementation of Social and Economic Public Policy, Based on Wisconsin Records 1835-1959, at 54-56 (Madison: University of Wisconsin Press, 1960).Google Scholar

102 See Garnett, supra note 22; Hanson, supra note 22; Kimball, supra note 101.Google Scholar

103 Self-Insurance on State-Owned Property, supra note 13, at 23; Hanson, supra note 22, at 52-53.Google Scholar

104 The oldest existing state insurance fund is the insurance sinking fund of South Carolina, which was established in 1900; the Wisconsin insurance fund (now the property insurance fund), established 1903, is second. The Wisconsin fund was hit by a large loss (destruction of the state capitol) in its second year, which forced it to borrow a large sum from the general fund, and has been under constant attack throughout its existence. See Kimball, supra note 101.Google Scholar

105 Study on State Self-Insurance, supra note 15, at 27, citing officials of Alabama, Florida, and South Carolina.Google Scholar

106 See note 15 supra.Google Scholar

107 See, e.g., ch. 403, 1973 Md. Laws, creating Md. Ann. Code art. 95, secs. 25 to 35 (Cum. Supp. 1976); ch. 160, 1973 Utah Laws, creating Utah Code Ann. secs. 63-9-23 to 63-9-29 (Supp. 1975) (State Properties Insurance Reserve Fund Act).Google Scholar

108 See 41 C.F.R. sec. 1-10.301 (1976):Google Scholar

Ordinarily, it is the policy of the Government not to insure its own risks. In the absence of specific statutory authority for the payment of insurance premiums, appropriated moneys of the United States generally are not regarded as available for that purpose. There are, however, exceptions to these two statements. Insurance will be required where it is mandatory by law, and may be required in the absence of any statutory prohibition when in the best interest of the Government.Google Scholar

See also Comptroller General of the United States, Report to the Congress: Survey of the Application of the Government's Policy on Self-Insurance, B-168106, of June 14, 1972 (mimeographed).Google Scholar

109 See, e.g., Ky. Rev. Stat. sec. 56.070 (1970); Minn. Stat. Ann. sec. 15.38 (West 1977); N.C. Gen. Stat. sec. 58-189 (Supp. 1975).Google Scholar

110 See, e.g., Cal. Gov't Code sec. 11007 (West Cum. Supp. 1977) (limited to fire insurance, and qualified by the power of the director of general services to authorize insurance contracts); D.C. Code sec. 1-816a (1973).Google Scholar

111 See, e.g., N.D. Cent. Code sec. 26-24-04 (1970); S.C. Code sec. 10-7-10 (1976).Google Scholar

112 See, e.g., Kan. Stat. secs. 74-4702, 75-4109 (1972); Fla. Stat. Ann. sec. 287.025 (West 1975).Google Scholar

113 See, e.g., Cal. Sts. & Hy. Code sec. 30450 (West 1969); Kan. Stat. sec. 74-4703(a) (1972); Ky. Rev. Stat. sec. 56.070(2) (1970).Google Scholar

114 See, e.g., Cal. Gov't Code sec. 11007.1.Google Scholar

115 See, e.g., Cal. Gov't Code sec. 14858 (West Cum. Supp. 1977) (state printing plant); Fla. Stat. Ann. sec. 284.01(3) (West 1975) (list of items and coverages not covered by the state insurance fund).Google Scholar

116 See, e.g., Fla. Stat. Ann. sec. 284.01(3) (West 1975); Kan. Stat. sec. 74-4705 (1975); N.H. Rev. Stat. Ann. sec. 9:27 (Supp. 1975). The latter applies, in addition to boilers, to elevators and unfired pressure vessels, so far as the agreement includes required inspections.Google Scholar

117 See, e.g., Ky. Rev. Stat. sec. 56.070(3) (1970).Google Scholar

118 Ga. Ann. Code sec. 91-131 (1971) demonstrates the difficulty of defining duties of this kind–it directs the governor to “keep insured” all state property, but also directs him to implement “a sound program of self-insurance.” Other statutes are more specific. N.C. Gen. Stat. sec. 115-133.1 (1975) directs school boards to procure fire and extended coverage insurance for not less than 75 percent of the value of their school buildings and adequately for equipment and contents; failure to obtain the insurance is heavily punished: up to $50.00 or 30 days imprisonment for every 24 hours without coverage.Google Scholar

119 See, e.g., Ga. Ann. Code sec. 89-932 (Cum. Supp. 1976); Kan. Stat. sec. 74-4707 (1972).Google Scholar

120 See, e.g., Ky. Rev. Stat. sec. 56.100 (1970) (“[n]o premium shall be charged on any one (1) subject of risk upon a valuation of more than three hundred thousand dollars ($300,000) unless the department of insurance has contracted for reinsurance that limits the liability of the fund to three hundred thousand dollars ($300,000) upon such subject of risk.”).Google Scholar

121 See, e.g., Ala. Code tit. 28, sec. 321 (Cum. Supp. 1973) (“The director of finance may, with the approval of the governor, purchase such reinsurance as may in the opinion of the director of finance, be necessary for the proper distribution of the risk.”); Fla. Stat. Ann. sec. 284.08 (West 1975) (“The department of insurance shall determine what excess coverage is necessary and may purchase reinsurance thereon upon approval by the department of general services.”); N.C. Gen. Stat. sec. 58-191.1 (Supp. 1975) (“The Commissioner of Insurance, with the approval of the Governor and Council of State, is authorized and empowered to purchase from insurers admitted to do business in North Carolina such insurance or reinsurance as may be necessary to protect the State Property Fire Insurance Fund against loss with respect to such insurance coverage.”); N.D. Cent. Code sec. 26-24-22 (1970) (“The commissioner of insurance shall procure and he shall keep in force, an excess of loss reinsurance contract naming the state fire and tornado fund as the reinsured.”); Or. Rev. Stat. sec. 278.035(1) (1975) (“The department may procure and keep in force one or more policies of excess catastrophe insurance on the property designated in ORS 278.011. The catastrophe insurance shall insure the Restoration Fund against a loss in excess of a determined amount caused by any of the hazards described in ORS 278.020, or any combination of such causes.”); S.C. Code sec. 10-7-120 (1976) (“The State Budget and Control Board may reinsure, upon terms which it may deem most advantageous, in a reliable insurance company or companies, such portion of their insurance liability as is commensurate with the principle of safe underwriting.”).Google Scholar

122 See, e.g., Iowa Code Ann. sec. 19.7 (West 1976) (“contingent fund”, to be used for repairing or rebuilding “any state property injured, destroyed, or lost by fire, storm, theft, or unavoidable cause” but also for local disaster aid and for “paying the expenses of suppressing any insurrection or riot”); S.D. Compiled Laws Ann. sec. 4-8-6 (1977) (“emergency building fund,” to be used for rebuilding or repairing state buildings and personal property destroyed or injured “by fire, lightning, hail, tornado, or any other loss or damage by the elements”); Vt. Stat. Ann. tit. 32, secs. 134, 135 (1977) (“insurance reserve fund”, to be used for replacing or rebuilding state buildings or property “damaged by fire or other hazard” and for the purchase and installation of fire prevention equipment or “for other like purposes which may tend to reduce the cost … of insurance”).Google Scholar

123 See, e.g., Ariz. Rev. Stat. sec. 41-622(A) (Cum. Supp. 1976-77) (“permanent uninsured loss coverage revolving fund” to be used for reimbursing state departments or agencies for uninsured property losses).Google Scholar

124 See Vt. Stat. Ann. tit. 32, sec. 134 (1977).Google Scholar

125 Idaho Code sec. 67-5757 (1977).Google Scholar

126 Pa. Stat. Ann. tit. 72, sec. 3731 (Purdon 1977).Google Scholar

127 Va. Code sec. 2.1-109 (1977).Google Scholar

128 Haw. Rev. Stat. secs. 41-1 to 41-4 (1977).Google Scholar

129 See Utah Code Ann. sec. 63-9-28 (Supp. 1975): “The deductible is established at $25,000 until such time as the total amount in the reserve fund … is maintained constantly at not less than $250,000. After this total amount has been so maintained, the deductible shall be increased to $50,000 unless the department shall determine it actuarially unsound to do so.”Google Scholar

130 Mont. Rev. Codes Ann. sec. 82-4305 (Cum. Supp. 1975).Google Scholar

131 See, e.g., Tenn. Code Ann. sec. 12-343 (1973).Google Scholar

132 Fla. Stat. Ann. secs. 284.30-.42 (1976) (Florida Casualty Insurance Risk Management Trust Fund); Or. Rev. Stat. sec. 278.100 (1975) (liability fund).Google Scholar

133 Mont. Rev. Codes Ann. sec. 82-4303 (Cum. Supp. 1975).Google Scholar

134 Ala. Code tit. 28, sec. 320 (1958).Google Scholar

135 See supra notes 113 and 122.Google Scholar

136 Utah Code Ann. secs. 63-9-27, 63-9-28 (Supp. 1975). Maine and Maryland also have deductibles. Me. Rev. Stat. tit. 5, sec. 1736 (Supp. 1973) ($250); Md. Ann. Code art. 95, sec. 31 (Cum. Supp. 1976) ($1,000).Google Scholar

137 See Wis. Stat. Ann. secs. 16.865(4), 605.09(1)(b) no. 1 (West Supp. 1976).Google Scholar

138 Ala. Code tit. 28, sec. 318 (1958).Google Scholar

139 See, e.g., Mass. Ann. Laws ch. 40, sec. 13 (Michie/Law. Co-op Cum. Supp. 1977) (authorizing towns and cities to establish municipal buildings insurance funds); N.J. Stat. Ann. sec. 40:51-4 (West 1967) (authorizing municipalities to create insurance funds for their properties); N.M. Stat. Ann. sec, 6-1-4(C) (1974) (authorizing officers and boards of the state and political subdivisions, including municipalities, to establish reserve funds up to the uninsured value of public buildings); Wash. Rev. Code Ann. sec. 28A.59.185 (1970) (authorizing school districts to create insurance funds for meeting property losses by fire).Google Scholar

140 See the references in note 98 supra and Nolting, supra note 7, at 21-26.Google Scholar

141 See Ala. Code tit. 28, sec. 317 (1958) (optional for schools); Ark. Stat. Ann. sec. 80-3513 (Cum. Supp. 1975) (schools permitted to obtain coverage from the Public Elementary and Secondary School Insurance Fund); Wis. Stat. Ann. sec. 605.02(2) (West Supp. 1976) (optional for local governments).Google Scholar

142 Iowa has a special fund–the county indemnification fund–to pay liability claims against county officials and employees. Iowa Code Ann. sec. 332.36 (West 1977). The fund gets its income from special property tax levies.Google Scholar

143 See note 151 infra.Google Scholar

144 N.D. Cent. Code sec. 26-24-09 as amended by ch. 234, sec. 4 1967 N.D. Sess. Laws.Google Scholar

145 S.C. Code secs. 10-7-30, 10-7-40 (1976).Google Scholar

146 Id. sec. 10-7-20.Google Scholar

147 See Linn & Joyner, supra note 9, and the dissertations cited supra note 15.Google Scholar

148 Ark. Stat. Ann. secs. 80-3509 to 80-3523 (Cum. Supp. 1975); N.C. Gen. Stat. secs. 115-134 to 115-141 (1975).Google Scholar

149 Ala. Code tit. 28, sec. 317 (1958); Haw. Rev. Stat. sec. 41-2 (1968); S.C. Code sec. 10-7-40 (1976); Wis. Stat. Ann. sec. 605.02(2) (West Supp. 1976).Google Scholar

150 Minot Special School Dist. No. 1 v. Olsness, 53 N.D. 683, 208 N.W. 968 (1926).CrossRefGoogle Scholar

151 Ch. 159, 1919 N.D. Sess. Laws, the state fire and tornado fund act. The law has since been frequently amended; the present version is in N.D. Cent. Code secs. 26-24-01 to 26-24-26 (1970).Google Scholar

152 Minot Special School Dist. No. 1 v. Olsness, 53 N.D. 683, 208 N.W. 968, at 973 (1926).Google Scholar

153 An amendment adopted in 1967 (over the governor's veto) made participation optional for political subdivisions. Ch. 235, 1967 N.D. Sess. Laws sec. 2, amending N.D. Cent. Code sec. 26-24-09.Google Scholar

154 State ex rel. City of Missoula v. Holmes, 100 Mont. 256, 47 P.2d 624 (1935).Google Scholar

155 Ch. 179, 1935 Mont. Laws.Google Scholar

156 State ex rel. City of Missoula v. Holmes, 100 Mont. 256, 47 P.2d 624, at 631 (1935).Google Scholar

157 See Self-Insurance on State-Owned Property, supra note 14, at 23.Google Scholar

158 Minot Special School Dist. No. 1 v. Olsness, 53 N.D. 683, 208 N.W. 968, at 972-73 (1926).Google Scholar

159 See the references note 98 supra.Google Scholar

160 See, e.g., Report of the School Insurance Advisory Committee, supra note 14, case studies at 17-21. There have been complaints both by individual and corporate insurance buyers concerning the quality of the services provided by agents and other representatives of commercial insurers. See, e.g., Michael W. Collins, How to Forfeit Profitable Business, Best's Rev., Prop./Casualty Ins. Ed., Sept. 1976, at 24, 28; Corporate Insurance Buyers Complain About Inaccessibility of Underwriters, Nat'l Underwriter, Prop./Casualty Ins. Ed., Oct. 8, 1976, at 29.Google Scholar

161 See, e.g., Ark. Stat. Ann. secs. 80-3513, 80-3514 (Cum. Supp. 1975).Google Scholar

162 Charges of this kind were made by insurance agents in Wisconsin after the state Legislative Audit Bureau, in the course of a routine audit of the state insurance fund in 1973, had sent letters to a number of local government units that were not insured with the fund to inquire about their reasons. The Independent Insurance Agents of Wisconsin used this letter in 1974 to support their claim that the state government implicitly threatened adverse financial consequences if municipalities did not join the fund. Interview by Robert L. Gordon with Stanley C. DuRose, Wisconsin Commissioner of Insurance, in Madison, Wis., Sept. 20, 1974. The inquiry by the audit bureau did not yield conclusive results concerning the reasons why municipalities chose to stay outside the state fund but showed that some did not know about the program; consequently the audit report recommended that the fund should institute an information program. Wisconsin, Legislative Audit Bureau, Audit Report, State Insurance Fund, State Life Fund, 1972, at 10. Needless to say, the agents did not welcome this recommendation nor its successful implementation.Google Scholar

163 See note 101 supra and 1974 Report, supra note 101, at 31-33. The extent of the subsidization is shown not only by the amounts transferred to the general fund but also by a comparison of the premium receipts and loss expenses of the fund for the two classes of risks. During the 11-year period from 1960 through 1970, the fund collected for state risks $433,136 in premiums and paid out $5,313,781 for losses, resulting in a deficit of $4,880,645; for nonstate risks the fund collected premiums in the amount of $5,190,297 and paid losses in the amount of $2,072,135, resulting in a surplus of $3,118,162. 1975 Wisconsin Insurance Commissioner's Report (Business of 1974) 44.Google Scholar

164 After separation of the surplus accounts and with the surplus transfers to the general fund (see note 101 supra) shown to affect the surplus account for state risks only, the surplus account for state risks as of Dec. 1973 showed a deficit of $7,065,338, and the surplus account for nonstate risks showed a balance of $8,922,385. 1974 Report, supra note 101, at 36. By Dec. 31, 1975, the deficit for state risks had been reduced to $4,994,751, and the balance for nonstate risks had been increased to $12,016,381. 1976 Wisconsin Insurance Commissioner's Report (Business of 1975) 4-10 to 4-11.Google Scholar

165 Wis. Stat. sec. 605.21 (1975).CrossRefGoogle Scholar

166 See note 101 supra.Google Scholar

167 See, e.g., the evaluation of nine state programs in Self-Insurance on State-Owned Property, supra note 13, at 13-19.Google Scholar

168 1976 Report, supra note 164, at 4-8. The totals are from the 1975 Wisconsin Blue Book.Google Scholar

169 The survey was conducted by Robert L. Gordon, research assistant at the American Bar Foundation, in the winter of 1975. The responses must, of course, be evaluated with caution–a municipal finance officer would hardly admit openly the choice of commercial insurance over the state fund because of a commitment to a local insurance agent or other “political” reason.Google Scholar

170 See Audit Report, supra note 162, at 10. The insurance department had anticipated the audit bureau's recommendations and had engaged since 1970 in a vigorous campaign to inform local governments of the coverages available from the fund. The campaign has included personal visits, telephone conferences, and regional seminars on rating problems. See 1972 Wisconsin Insurance Commissioner's Report (Business of 1971) 31. The result has been a substantial increase in the number of local governments participating in the plan and in the total amount of insurance in force, as well as premium income. The growth is documented in successive reports of the insurance commissioner. For the latest figures, see 1976 Report supra note 168, at 4-8 to 4-11.Google Scholar

171 The following details are from a history of the Municipal Mutual Insurance Ltd., published on the occasion of its fiftieth anniversary. Arthur J. Watson, The First Fifty Years, Being the Story of Municipal Mutual Insurance Limited, 1903-1953 (London: Municipal Mutual Insurance Ltd., 1953). A short description of the company and its operations is also contained in Nolting, supra note 7, at 20.Google Scholar

172 The figures are from the company's Annual Report and Statement of Accounts for 1974. The total number of local governments was reduced by a general reorganization plan; the figures in the report do not include Scotland, where the municipal reorganization was not implemented until 1975.Google Scholar

173 Id.Google Scholar

174 Municipal Insurance Management: A Guide for Insurance Officers in Local Government (Westminster: Municipal Insurance Mutual Limited, 1974, looseleaf).Google Scholar

175 [Municipal Mutual Insurance Limited] Gazette (looseleaf collection of newsletters).Google Scholar

176 See, e.g., the introduction to id.Google Scholar

177 Information on recent developments was collected by Patricia K. Pfaff in interviews with officials of Municipal Mutual Insurance Ltd. and several municipal governments in Sept. 1975.Google Scholar

178 The information on German municipal insurance was collected by the author through correspondence with insurance carriers and other organizations in Germany.Google Scholar

179 For more details, see, e.g., 50 Jahre Versicherungsverband für Gemeinden and Gemeindeverbände Versicherungsverein auf Gegenseitigkeit (Cologne, 1962).Google Scholar

180 See, e.g., Badischer Gemeinde-Versicherungs-Verband, Öffentlichrechtliche Körperschaft, Rückblick 1923-1973 (Karlsruhe, 1973).Google Scholar

181 Id. at 14.Google Scholar

182 For a description of European legal expense insurance, see Werner Pfennigstorf, Legal Expense Insurance: The European Experience in Financing Legal Services (Chicago: American Bar Foundation, 1975).Google Scholar

183 Id. at 84-87. The requirement is based on the potential conflict of interest that exists if an insurer finds itself in the role of legal expense insurer for one party and liability insurer for the other.Google Scholar

184 S. J. Loccufier, The Insurance Institutions of Local Authorities in Europe, Report prepared for a seminar of the International Union of Local Authorities (IULA), July 11, 1975, in London.Google Scholar

185 See, e.g., James Pettipas, A Look at Today's Reinsurance Market, Nat'l Underwriter, Prop./Casualty Ins. Ed., June 18, 1976, at 35, 37.Google Scholar

186 See generally for the role of the mutual as a standard response to inadequate supply conditions in the insurance market: John Bainbridge, Biography of an Idea: The Story of Mutual Fire and Casualty Insurance (Garden City, N.Y.: Doubleday & Co., 1952).Google Scholar

187 See, e.g., Edward V. French, Comp., 1860–Fifty Years–1910–Arkwright Mutual Fire Insurance Company (Boston, 1912). J. Finley Lee, The Competitive Role of the Associated Factory Mutuals, 36 J. Risk & Ins. 401 (1969).Google Scholar

188 See, e.g., Grant R. Hubbard, “Bedpan Mutuals”: Will They Survive? Best's Rev., Prop./Casualty Ins. Ed., Sept. 1976, at 14.Google Scholar

189 Nolting, supra note 7, at 27.Google Scholar

190 A group of seven Chicago suburbs in southern Cook County (Midlothian, Crestwood, Robbins, Markham, Country Club Hills, Oak Forest, and Posen) in late 1976 commissioned Alexander & Alexander to prepare a study on the feasibility of an arrangement under which the seven municipalities would, as a group, retain a substantial portion of their risks and then purchase excess loss insurance in the commercial market. Towns Waiting for Costs on the Self-Insurance Line, Suburban Trib, South Cook County (supplement to Chicago Tribune), Jan. 7, 1977, at 6, col. 1; Slow Start for Self-Insurance Study, id., Feb. 23, 1977, at 4, col. 1. Progress is hampered by delays in obtaining the necessary information on loss experience, however. Patrick Reardon, Self-Insurance Fever Cools Off, id., April 29, 1977, at 9, col. 1.Google Scholar

191 See notes 67-73 supra.Google Scholar

192 This has been suggested by Douglas Thornsjo, Municipalities and Mutuals: A New Use for an Old Insurance Format? 10 Forum 1252 (1975).Google Scholar

193 See Nolting, supra note 7, at 27.Google Scholar

194 This includes especially empirical studies of the needs and attitudes of the prospective participants, as discussed at pp. 307-8 supra.Google Scholar