Court Opinion

ID: 9527160
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:28:00.605037+00
Date Added: 2024-06-11T13:25:36.195003
License: Public Domain

CONOVER, Judge,
dissenting.
I respectfully dissent. Although the master contract defining the pooling agreement between the townships does have some indicia of a standard insurance contract, its overall effect and purpose is self-insurance.
In my opinion, the majority’s concept of self-insurance is too narrow. In Antipo-rek, supra, the Illinois Supreme Court recognized IRMA was a self-insurance plan. In so doing, it noted we must be careful to look at the substance of innovative methods designed for efficient and realistic risk management.1 102 Ill.Dec. at 296, 499 N.E.2d at 1309. The plan in the instant case is identical to the Antiporek plan: small governmental operations have combined their resources to be able to pay future claims against them. The master contract in this case provides each governmental entity must make annual contributions to the Budgetary and Cumulative Reserve Funds. These funds, like the pooled *1103funds in Antiporek, provide the primary sources for the payment of claims. The fact the pooling agreement here also provides a portion of the contributions to the Budgetary Fund be used to purchase third tier reinsurance does not, in my opinion, make the agreement an insurance contract governed by IND.CODE 27-1-3-20. Reinsurance is an innovative and efficient enhancement of, and supplement to, the self-insurance plan.
Furthermore, it is my opinion IIRMA is authorized by the Interlocal Cooperation Act. Indiana law provides “[a] political subdivision may purchase insurance to cover the liabilities of itself or its employees.” (Emphasis supplied). IC 34-4-16.5-18.2 The legislature’s use of the term “may” is permissive. City of Tell City v. Noble (1986), Ind.App., 489 N.E.2d 958, 961, reh. denied, trans. denied. Thus, the political subdivision (township) has the discretion to decide whether the purchase of insurance is the. best way to protect against liability. The corollary to that language is a township not choosing to purchase insurance may protect itself with a plan of self-insurance or “run naked,” i.e., have no insuring plan at all. Under the Interlocal Cooperation Act, a power that can be exercised by a single political subdivision can be exercised jointly with other entities. IC 36-1-7-2.
I would affirm the judgment of the trial court.

. We need not speculate on the need for innovation in this age of increasing insurance premiums. The question here is whether Indiana townships are authorized to enter into self-insurance contracts.

. A township is a "political subdivision” under IC 36-1-2-13.