Opinion ID: 198249
Heading Depth: 2
Heading Rank: 2

Heading: The Insurance Trust's Endorsement

Text: 18 Employers contends that the Insurance Trust's agreed payment of all except $1,000 of the $75,000 Coregis deductible under the Insurance Trust's Endorsement constituted other insurance. 2 This presents a knottier question than the previous one. 19 We begin by assuming for purposes of this section of the opinion, against Employers' objection, that the Insurance Trust was at all relevant times a pooled risk management program (PRMP) established under N.H.Rev.Stat. Ann. § 5-B:5. The special master found that the Insurance Trust was a PRMP and the district court adopted his report. We shall return to Employers' objection to this characterization in the concluding section of this opinion, see infra; but assuming, arguendo, as determined below, that the Insurance Trust was a PRMP, we hold that the financial assistance it furnished Stratford in paying claims within the $75,000 Coregis deductible was not other insurance. 20 New Hampshire law specifically declares that PRMPs are not insurers. N.H. R.S.A. § 5-B:6(I) states: 21 Any pooled risk management program meeting the standards required under this chapter is not an insurance company, reciprocal insurer, or insurer under the laws of this state, and administration of any activities of the plan shall not constitute doing an insurance business for purposes of regulation or taxation. 22 The New Hampshire courts have not considered whether, given the above statutory exception, the benefits paid by a PRMP should nonetheless be considered as insurance for the purposes of an insurer's other insurance clause. 3 We think it likely that were the Supreme Court of New Hampshire presented with the question, it would answer in the negative. 23 Employers claims that the limiting language, for purposes of regulation or taxation, implies that the legislature intended PRMPs to be treated as insurers for all purposes except regulation or taxation. However, while presumably the New Hampshire statutory law on PRMPs would not prohibit private parties from expressly contracting to treat pooled risk agreements as a form of other insurance, it certainly suggests that the products of PRMPs are outside of the ordinary meaning of the undefined term insurance in New Hampshire. The first clause of the statute declares without qualification that a PRMP is not an insurance company nor an insurer under the laws of the state, while the second clause says that the administration of any activities of a PRMP shall not constitute doing an insurance business for state regulation and tax purposes. As the statute places PRMPs beyond the ken of state insurance, it behooves insurers and others who wish nonetheless to include PRMPs and their products under the term insurance to so provide by apt language. 24 Employers seeks to minimize the significance of the statute by contending that the term regulation refers only to promulgated administrative regulations. The ordinary meaning of regulation, however, is a rule or order prescribed for management or government. See Black's Law Dictionary at 1286. That the legislature intended this more expansive definition of regulation is clear from the statute's preamble. There, the legislature stated its findings that 25 insurance and risk management is essential to the proper functioning of political subdivisions; that risk management can best be achieved through purchase of traditional insurance or by participation in pooled risk management programs established for the benefit of political subdivisions; ... that the resources of political subdivisions are presently burdened by the securing of insurance protection through standard carriers; and that pooled risk management programs which meet the standards established by this chapter should not be subject to insurance regulation and taxation by the state. 26 N.H. R.S.A. § 5-B:1. This section indicates that the legislature sought to facilitate risk protection coverage for political subdivisions by granting PRMPs special status, and treating them differently from providers of traditional insurance. 27 Employers nonetheless urges that the benefits provided by PRMPs operate like insurance, hence should be treated the same. PRMPs obviously do have insurance-like qualities. In N.H. R.S.A. § 5-B:2(IV), the legislature defined risk management as 28 the defense of claims and indemnification for losses arising out of the ownership, maintenance, and operation of real or personal property and the acts or omissions of officials, employees, and agents; the provision of loss prevention services including, but not limited to, inspections of property and the training of personnel; and the investigation, evaluation, and settlement of claims by and against political subdivisions. 29 The above functions are often carried on by insurance companies (though also by self-insurers). But while the program may have some insurer-like aspects, which is presumably why statutory exemption from insurance regulation was deemed necessary, the legislature has expressly removed it from the category of insurance. By so doing, it abolished any normal expectation in New Hampshire that the undefined term insurance would, without more, include PRMPs. 30 Had Employers wanted its insurance obligation to be excess to funds that Stratford might receive from a third party such as the Insurance Trust's pooled arrangement, Employers could and should have so specified in the policy rather than relying on the term insurance. See Trombly v. Blue Cross/Blue Shield of New Hampshire-Vermont, 120 N.H. 764, 423 A.2d 980 (N.H.1980) (holding that ambiguities in insurance contracts are construed against the drafter); see also RCI Northeast Serv. Division v. Boston Edison Co., 822 F.2d 199, 205 (1st Cir.1987)(In the arena of commerce, it avails us little to stand language on its ear in an effort to rescue a firm from a sinkhole of its own design. It is no appropriate part of judicial business to rewrite contracts freely entered into between sophisticated business entities.). 31 Assuming, therefore, that the Insurance Trust was a PRMP, we hold that--as the Insurance Trust's Endorsement did not constitute insurance as that term is usually understood under New Hampshire law--it was not other insurance under Stratford's contract with Employers.