An Act To Create a State-sponsored Mutual Liability Company To Underwrite Risk for Snowmobile and ATV Clubs
Maine Legislature, Session 123, LD 1116
Committee: Insurance and Financial Services
Sponsors: MILLS, CLARK, GOOLEY, NUTTING, RA YE, SHERMAN, SMITH

Legislative Document 
No. 1116 
S.P.368 
March 6, 2007 
An Act To Create a State-sponsored Mutual Liability Company To 
Underwrite Risk for Snowmobile and ATV Clubs 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Senator MILLS of Somerset. 
JOY J. O'BRIEN 
Secretary of the Senate 
Cosponsored by Representative CLARK of Millinocket and Senators: GOOLEY of Franklin, 
NUTTING of Androscoggin, RA YE of Washington, SHERMAN of Aroostook, SMITH of 
Piscataquis. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA c. 52-A is enacted to read: 
CHAPTER 52-A 
MAINE SNOWMOBILE AND ATV CLUB MUTUAL LIABILITY 
COMPANY 
§3751. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Board. "Board" means the Board of Directors of the Maine Snowmobile and 
ATV Club Mutual Liability Company. 
2. Company. "Company" means the Maine Snowmobile and A TV Club Mutual 
Liability Company created in section 3752. 
3. Snowmobile and ATV club. "Snowmobile and A TV club" means a volunteer 
nonprofit association formed for the purpose of promoting the use of snowmobiles or all-
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terrain vehicles for recreation that maintains and grooms trails for riding snowmobiles or 
all-terrain vehicles over public land and private land with permission ofthe landowner. 
§3752. Establishment 
1. Company established. The Maine Snowmobile and A TV Club Mutual Liability 
Company is established as an assessable domestic mutual insurance company subject to 
all the requirements and standards of this Title that are applicable to cash plan insurers 
unless specifically exempted from those requirements or standards or that are clearly 
inconsistent with the provisions contained in this chapter. Notwithstanding any other law 
to the contrary, the company's authority to operate is limited as provided in this chapter. 
2. 
Liability insurance. 
The company shall provide liability insurance for the 
protection of snowmobile and A TV clubs and their members and to indemnify against 
liability landowners who permit snowmobile and A TV clubs to maintain recreational 
trails on private land. The company may not write other lines of insurance. 
3. Exclusion from guaranty funds. The company and its policyholders are exempt 
from participation in and may not join or contribute financially to, nor be entitled to the 
protection of, any plan, pool, association or guaranty or insolvency fund authorized or 
required by this Title. 
4. Incorporation. The company must be incorporated pursuant to the provisions of 
this Title and Title 13. Upon appointment, the incorporators shall execute a certificate of 
organization as required by this Title and immediately pursue a certificate of authority for 
Page I - 123LR1418(Ol)-1 
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an assessable domestic mutual insurance company. The incorporators shall appoint the 
initial 9 members of the board as required in subsection 5. 
5. Composition of the board. The company is governed by a 9-member board as 
follows. 
Five members must be representatives of snowmobile and A TV clubs that 
purchase coverage from the company, except that the initial appointments may include 
representatives of snowmobile and A TV clubs without regard to whether or not the club 
has purchased liability coverage through another insurance company. Two members 
must be landowners who authorize snowmobile and A TV clubs to use their private land. 
One member must have experience and expertise relating to liability insurance. The 
remaining board member is the president and chief executive officer appointed pursuant 
to section 3755, subsection 4 who shall serve on the board while employed as president 
and chief executive officer. A member of the board may not be a lobbyist required to be 
registered with the' Secreta!), of State. 
6. Terms. A full term is 3 years. An individual may not serve more than 2 full 
terms as a board member. All members shall serve for the terms provided and until their 
successors are appointed or elected and qualified. 
7. Corporate ~overnance. The initial board shall, at the organizational meeting of 
the company to complete organization, adopt bylaws consistent with section 3359. The 
bylaws must provide a schedule of meetings and rules specifically relating to the conduct 
of meetings and voting procedures. 
8. 
Annual report. 
In addition to any other reports required by this Title, the 
company shall submit an annual report to the Governor and to the joint standing 
committee of the Legislature having jurisdiction over insurance matters that discloses the 
business transacted by the company during the previous year and states the resources and 
liabilities of the company together with other pertinent information considered 
appropriate by the board. The report must contain, at a minimum, a summa!), of the latest 
annual statement filing required to be filed under this Title with the superintendent 
prepared on a basis of statuto!), accounting precepts. Any variations between the annual 
statement and the annual report must be reconciled to clearly show variances and the 
basis for any different values. 
9. 
Nominatin~ committee. The board shall create a nominating committee. The 
nominating committee shall present to the board nominees for board member positions. 
§3753. Initial fundin~ and operation 
Upon appointment of the initial board, the board shall elect a chair and shall employ a 
president who shall serve as chief executive officer pursuant to section 3755, subsection 
4. 
The company may borrow from the General Fund initial start-up funds of up to 
$5,000,000. Any funds borrowed must be secured by future premiums collected, and half 
of the funds borrowed plus interest must be repaid not later than March 31, 2010, and the 
remaining funds plus interest must be repaid not later than March 31, 2012. 
§3754. Nonstate agency 
The company is not considered a state agency or instrumentality of the State for any 
purpose. Except as provided for initial start-up funds in section 3753, the company is not 
and may never be supported in any way by the State's General Fund or a guaranty by the 
State, a state agency or a division of the State. The State may not borrow or otherwise 
appropriate funds from the company. 
§3755. Powers of the board 
The board has full power, authority and jurisdiction over the company. 
1. General authority. The board may perform all acts necessary or convenient in 
the exercise of any power, authority or jurisdiction over the company, either in the 
administration of the company or in connection with the business of the company to 
fulfill the purposes of this chapter. 
2. Standard of performance. The board shall discharge its duties with the care, 
skill, prudence and diligence of a prudent board of directors acting in a similar enterprise 
and purpose. 
3. Personal liability. The members of the board and officers or employees of the 
company are not liable personally, either jointly severally, for any debt or obligation 
created or incurred by the company. 
4. President. The board shall appoint a president who shall serve as chief executive 
officer and may appoint other executive officers as it determines necessary. 
5. Investment managers. The board shall appoint investment managers to oversee 
and manage the investment of assets of the company in a manner that safeguards the 
value of those assets and maximizes investment return commensurate with risk and 
liquidity restrictions contained in chapter 13. 
A. An investment manager appointed by the board is subject to standards applicable 
to fiduciaries responsible for safeguarding assets of such a company. The investment 
manager must be appointed pursuant to a contract in writing that clearly establishes 
the fiduciary nature of the relationship of the fiduciary to the company. 
B. 
The board shall set investment policy for the investment managers of the 
company through an investment committee composed of not fewer than 3 members 
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nor more than 5 members of the board. Transactions in the sale or purchase of 
securities by an investment manager may be in a nominee name as designated by the 
board. Authority to acquire or sell securities for the company must be conveyed to 
the investment manager in writing by the investment committee. 
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C. In any agreement empowering the investment managers to act for or on behalf of 
the company, there must be provisions for periodic reporting by the managers 
respecting investments held in the name of the company, the yield received on such 
investments and any principal cash balances held by depositories or the investment 
managers. 
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D. Securities and property of the company must be held in a manner consistent with 
the requirements for mutual insurance companies set forth in this Title. 
§3756. General powers 
1. Powers. For the specific purpose of exercising the responsibilities granted in this 
chapter and effectuating the purposes of this chapter, the company has the powers 
otherwise granted to a casualty insurer and may: 
A. Hire employees or enter into contracts relating to the administration of a liability 
Insurer; 
B. Declare a dividend when there is an excess of assets over liabilities and surplus 
requirements established in this Title; and 
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C. Enter into agreements to reinsure all or part of the company's exposure to loss and 
to otherwise limit the risk to the company and manage its financial condition. 
2. Assessments; plan of operation. The board shall: 
A. Assess policyholders to cover its expenses, claims, obligations and other funding 
needs consistent with this chapter and Title; and 
B. 
Develop and file with the superintendent for review and approval a plan of 
operation and any amendments to a plan of operation necessary or suitable to ensure 
the fair, reasonable and equitable administration of the company. 
§3757. President and chief executive officer 
1. Appointment. The president is appointed pursuant to section 3752, subsection 4. 
The president must be qualified by education and experience to manage an organization 
with financial and operational obligations to its policyholders and claimants. 
2. Term. The president serves at the will of the board. 
3. Compensation. The president is entitled to compensation as established by the 
board and is subject to any reasonable requirements, including bonding, established by 
the board. 
4. Board member. The president is a member of the board pursuant to section 
3752, subsection 5, but may not be the chair of the board. 
5. Duties. The board, as part of its plan of operation, shall designate the powers and 
duties of the president. The president may, with direction from the board, assist in the 
development of the plan of operation and other start-up functions. 
§3758. Funding; surplus 
1. Initial funding. The company shall borrow funds pursuant to section 3753 for 
initial operating expenses. 
After consultation with the president and board, the 
superintendent shall set the rates for the first year of operation of the company. 
2. Ongoing funding. The company: 
A. Shall collect from each applicant an advance premium of 25% of the estimated 
annual premium and shall bill subsequent premiums with advance notice to insureds 
to ensure that, if periodic premiums are not paid by insureds in a timely manner, 
adequate time is available to give proper notice of cancellation prior to a previously 
collected premium being fully earned; 
B. May assess its policyholders for additional funds to meet operating needs or as 
required by law; and 
C. May provide premium payment plans and premium financing programs providing 
payment terms other than those specified in paragraph A. Until the company has 
obtained the surplus otherwise required under this Title for casualty insurance 
companies, the company must receive approval from the superintendent before 
implementing these programs. 
3. Transition surplus, premium levels. Notwithstanding other provisions of this 
Title, the company is permitted to operate for a period of up to 10 years with a level of 
surplus less than that otherwise required for a mutual insurer authorized to write casualty 
insurance if the following conditions are met. 
A. The superintendent shall set the confidence level, which is the probability that the 
provision of actual costs will be less than the actual costs by a certain percentage, for 
the company. The company shall establish its rates at a level to cover its anticipated 
overhead expenses and to cover, on a discounted basis, the actuarially determined 
incurred claims and claim-settlement costs at not less than the confidence level set by 
the superintendent. 
B. The company shall annually file with the superintendent an actuarial analysis of 
its reserves and its proposed rate level. The company shall establish its reserves, 
including provisions for incurred but not reported reserves, at not less than the 
confidence level set by the superintendent. 
C. Any surpluses from any fund vear must be retained by the company and credited 
toward its surplus account. No surplus may be returned to policyholders or credited 
to other fund years until the superintendent has certified that the company has 
achieved the surplus level required of an assessable domestic mutual insurance 
company authorized to write casualty insurance. 
D. Not later than 10 years from October 1, 2008, the company, through premiums, 
retained dividends, sale of bonds, assessments or any other legally authorized means, 
shall accumulate surplus and obtain certification from the superintendent that the 
company has obtained the surplus otherwise required under this Title. 
If the 
superintendent finds, after hearing, that inadequate surplus exists and the 10-year 
transition period has expired, the superintendent shall declare the company impaired 
and take appropriate action to rehabilitate or liquidate the company. 
If the 
superintendent finds that surplus is not being accumulated at an adequate rate 
consistent with its premium volume during the 10-year period, the superintendent 
shall so inform the board. 
E. If the superintendent finds at the expiration of 10 years of company operations 
described in paragraph D, or earlier, that the company has accumulated or otherwise 
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obtained surplus as required pursuant to this Title for casualty insurance companies 
9..Q~ratj.!l..g ... i>.!1 the cash plan, .the requiremen~ contl'!jl2~g .. in_.J2~!1!g@P.!!L.:~~ 
teI:minate. The company shall_at that point be subject to the standm;ds of section 410 
and other sections of this Title applicable to a mutual casualty insurer writing liability 
insurance. 
§3759. Availability of coverage 
On or before October 1, 2008, the company shall provide liability coverage to 
snowmobile and A TV clubs otherwise entitled to coverage but not able to or not electing 
to purchase coverage in the voluntary insurance market or to self-insure. The coverage 
provided under this chapter must include coverage to indemnify against personal liability 
any landowner who permits the operation of snowmobiles and all-terrain vehicles for 
recreational use on the landowner's property under an agreement with a snowmobile or 
ATV club. 
Sec. 2. Initial terms of members of the Board of Directors of the Maine 
Snowmobile and ATV Club Mutual Liability Company. Other than the chief 
executive officer, of the initial members of the Board of Directors of the Maine 
Snowmobile and A TV Club Mutual Liability Company, 3 serve 3-year terms, 3 serve 2-
year terms and 2 serve one-year terms. 
SUMMARY 
This bill establishes the Maine Snowmobile and A TV Club Mutual Liability 
Company to manage liability risks for snowmobile and ATV clubs in the State and to 
indemnify landowners.