CHAPTER 26.1-14MEDICAL MALPRACTICE INSURANCE26.1-14-01. Purpose. There is a nationwide crisis in the field of medical malpracticeinsurance and physicians practicing medicine within the state of North Dakota are finding, or will<br>find, it increasingly difficult, if not impossible, to obtain medical malpractice insurance.Thepurpose of this chapter is to provide for the payment of indemnities to persons suffering injury<br>arising out of the rendering of or the failure to render professional services by physicians and to<br>provide means whereby physicians may obtain insurance against liability therefor, subject to the<br>limitations and immunities provided in this chapter.26.1-14-02. Definitions. As used in this chapter, unless the context or subject matterotherwise requires:1."Company" means the North Dakota medical malpractice mutual insurance<br>company.2."Physician" means physician and surgeon (M.D.) and osteopathic physician and<br>surgeon (D.O.).3."Practice of medicine" means the practice of medicine, surgery, and obstetrics and<br>has the same meaning specified in subsection 2 of section 43-17-01.26.1-14-03. Authority. An incorporated mutual insurance company is authorized to beknown as the North Dakota medical malpractice mutual insurance company. The company is<br>subject to and governed by this chapter and is not subject to the laws of this state relating to<br>insurance and insurance companies except as specifically provided in this chapter.Thecompany has all the powers, privileges, and immunities granted by and is subject to all the<br>obligations imposed upon a mutual insurance company under chapters 26.1-12 and 10-33. If a<br>provision of chapter 26.1-12 or 10-33 and a provision of this chapter are both by their terms<br>applicable, the provision of this chapter controls.26.1-14-04.Board of directors - Articles of incorporation - Bylaws - Insuringpowers.1.The company will be governed by a board of directors consisting of eleven<br>members.The commissioner shall appoint the initial board within thirty days ofnotification by the state board of medical examiners of its decision for<br>implementation of this chapter from fifteen nominees proposed by that board. The<br>initial board shall serve for an initial term of seven months. Thereafter, the directors<br>must be elected by the members of the company in accordance with the articles of<br>incorporation and bylaws.2.At least seven members of the board of directors must be licensed physicians and at<br>least two members of the board must have had insurance underwriting or claims<br>handling experience.3.Within thirty days after appointment by the commissioner, the initial board of<br>directors shall prepare and file articles of incorporation and bylaws in accordance<br>with this chapter and chapter 26.1-12.4.Upon filing the articles of incorporation and bylaws with the commissioner, the<br>articles and bylaws are operative and the commissioner shall issue a certificate of<br>authority subject only to verification by the commissioner that the required initial<br>surplus of the company has been paid and all deposits have been completed.5.The certificate of authority authorizes the company to issue policies of casualty<br>insurance as follows:Page No. 1a.Insurance against liability of physicians for injury arising out of the rendering of<br>or failure to render professional services by the insured.b.Insurance against the liability of any person for whose act or omissions a<br>physician is responsible under subdivision a, or with whom the physician is<br>associated, including partners, employees, employers, associates, consultants,<br>a professional service corporation whose stock is owned by an insured, or a<br>professional service limited liability company whose membership interests are<br>owned by the insured.c.Insurance against other liabilities for injury by persons employed in, by property<br>used in, or by activities incidental to, the practice of medicine by the named<br>insured, when issued as incidental coverage with or supplemental to insurance<br>specified in subdivision a.26.1-14-05. Initial policyholders surplus - Tax - Membership fee.1.If physicians practicing medicine within North Dakota find it difficult to obtain medical<br>malpractice insurance, the state board of medical examiners, by a majority vote of<br>its membership, may elect to initiate and implement this chapter. Before fifteen days<br>from the date the election to implement this chapter is made, the board shall certify<br>to the state treasurer a list of all licensed physicians as shown in the latest record of<br>the board.2.A special one-time tax for the privilege of practicing medicine in North Dakota will be<br>levied on licensed physicians listed by the state treasurer in accordance with<br>subsection 1 in the amount of five hundred dollars per licensed physician, to be<br>levied, assessed, and collected by the state treasurer. The tax does not apply to any<br>physician who submits a statement, sworn to under penalties of perjury, stating that<br>the physician has permanently terminated the practice of medicine in the state of<br>North Dakota. The state treasurer shall prescribe the form of the statement.3.The legislative assembly appropriates and dedicates the entire proceeds of the tax<br>provided by this chapter as the initial policyholders surplus of the company, and the<br>treasurer and director of the office of management and budget shall promptly pay<br>over the proceeds of the tax to the company.4.The board of directors of the company may establish membership fees in amounts<br>as it deems reasonable to be paid by members of the company. Any physician who<br>has paid the tax specified in subsection 2 must be credited the amount of the tax<br>paid against the liability for any membership fee.5.Upon payment of the specified membership fee, a physician may be insured by the<br>company for any and all hazards customarily insured by the company, subject to any<br>limitation of coverage specified by the company in accordance with policy limitations,<br>exclusions, conditions, deductibles, and loss-sharing requirements.26.1-14-06. Minimum surplus. The minimum surplus to be maintained by the companymust be three hundred thousand dollars.26.1-14-07. Management and administration of the company.1.If, in the judgment of the board of directors, the affairs of the company thereby may<br>be administered suitably and efficiently, the company may enter into a contract, not<br>to exceed five years in duration, whereby the affairs of the company may be<br>administered by a licensed insurer or a licensed nonprofit health service plan,<br>subject to any continuing direction by the board of directors as specified in the<br>articles of incorporation, the bylaws, and the contract.Page No. 22.The basis of compensation to the administering licensed insurer or plan in any<br>contract described in this section must be reimbursement of expenses reasonably<br>allocable to the business of the company plus an appropriate and reasonable<br>additional allowance as specified in the contract. Any additional allowance, if based<br>upon premium volume or size of membership, must contain a reasonable aggregate<br>dollar maximum.The amount of the fee may not be made dependent on theunderwriting or investment profits of the company.3.Upon the execution of any contract, the company shall promptly file a copy with the<br>commissioner. The contract becomes effective thirty days from the date of the filing<br>unless the commissioner, prior to the effective date, disapproves the contract as<br>illegal, unduly onerous, or not in the best interest of the company and states the<br>reasons for the findings.26.1-14-08. Rates and rate filing. The rates and premiums to be charged for insuranceby the company are subject to chapter 26.1-25 except that the commissioner may not disapprove<br>or terminate the effectiveness of any rate filing made by or on behalf of the company on the<br>grounds that the rates or premiums are excessive.26.1-14-09. Reserves for malpractice claims.1.The reserve maintained by the company for outstanding losses under insurance<br>against injury arising out of the rendering of or the failure to render professional<br>services by an insured for all policies written during the eight years immediately<br>preceding the date of the reserve determination must be seventy percent of the<br>earned premiums of each of the eight years less all losses and loss expense<br>payments made under policies written in the corresponding years.2.In any event, the reserves for each of the eight years may not be less than the<br>aggregate of estimated unpaid losses and loss expenses for claims incurred under<br>liability policies written in the corresponding year computed on an individual case<br>basis as to cases known and reported, plus reserves in an amount estimated in the<br>aggregate to provide for the payment of all losses or claims incurred on or prior to<br>the date of valuation but not previously reported, including an amount estimated to<br>provide for the expenses of adjustment, settlement, or litigation of the losses or<br>claims.26.1-14-10. Dividends to policyholders. Every policy issued by the company mustinclude a provision that the company periodically will ascertain and apportion any divisible<br>surplus under the policy which may accrue on policy anniversaries or other dividend dates<br>specified in the contract. This provision must provide that no apportionment or payment of any<br>divisible surplus may take place until the expiration of at least eight years from the termination of<br>the policy period for which the dividend applies.This provision also must provide that thedividends may be paid only as directed by the board of directors from divisible surplus after due<br>consideration of the financial condition and operating needs of the company.26.1-14-11. Limited liability of insureds.1.Any person insured by the company for liability because of injury arising out of the<br>rendering of or the failure to render professional services in limits equal to or greater<br>than five hundred thousand dollars for each claim or suit covered, subject to an<br>aggregate limit of liability for all claims insured in a single policy period equal to or in<br>excess of one million dollars, is immune from all liability in excess of these limits,<br>and further is immune from any liability for sums owing by the company under the<br>terms of the policy regardless of whether or not the company has paid the sums.<br>The immunity established by this section applies to an insured individual,<br>professional service corporations, or professional service limited liability companies<br>notwithstanding any other provision of the law.Page No. 32.This section does not relieve an insured from the insured's personal share of liability<br>not in excess of the five hundred thousand dollar and one million dollar limitations<br>specified in subsection 1 for a loss, expense, or damage not insured by the company<br>by reason of noncoverage, exclusions, deductibles, loss-sharing provisions, or<br>conditions in the applicable policy of the company.26.1-14-12. Terms of coverage - Classifications.1.The terms and conditions of all policies issued by the company to physicians must<br>be essentially uniform in terms and coverage.2.Notwithstandingsubsection 1,thecompanymayprescribereasonableclassifications of physicians' and insureds' activities and exposures based on<br>good-faith determination of relative exposures and hazards among classifications<br>and may vary the limits, coverages, exclusions, conditions, and loss-sharing<br>provisions among classifications. Additionally, the company may describe, in the<br>case of an individual physician within a class, reasonable variations in the terms of<br>coverage including deductibles in loss-sharing provisions, based upon the insured's<br>prior loss experience and current professional training and capability.26.1-14-13. Exemption from taxation. The property, income, premiums, and activitiesof the company are exempt from all taxes and assessments and from any fees specified for<br>licenses and certifications of the insurance laws except for the tax imposed by section 26.1-03-17<br>and any assessment made by the insurance guaranty association in the event that an affirmative<br>election is held in accordance with section 26.1-14-15.26.1-14-14. Services to the company. Any licensed nonprofit health service plan byappropriate action of the board of directors or board of trustees may enter into a contract with the<br>company in accordance with section 26.1-14-07 for the furnishing of services to the company. In<br>the performance of the services under any contract, the contracting health service plan is subject<br>to the provisions of this chapter applying to the company.26.1-14-15. Optional membership in insurance guaranty association. The companymay not be a member insurer under chapter 26.1-42.1 unless the board of directors by<br>appropriate resolution, certified to and filed with the commissioner on or before December<br>thirty-first following the issuance of its certificate of authority, elects to become a member. If<br>there is an affirmative election, the company becomes a member of the insurance guaranty<br>association effective July first of the following year. The election is irrevocable. In absence of a<br>timely election, no policyholder, claimant, or creditor of the company may receive any payment<br>by the insurance guaranty association.Page No. 4Document Outlinechapter 26.1-14 medical malpractice insurance
CHAPTER 26.1-14MEDICAL MALPRACTICE INSURANCE26.1-14-01. Purpose. There is a nationwide crisis in the field of medical malpracticeinsurance and physicians practicing medicine within the state of North Dakota are finding, or will<br>find, it increasingly difficult, if not impossible, to obtain medical malpractice insurance.Thepurpose of this chapter is to provide for the payment of indemnities to persons suffering injury<br>arising out of the rendering of or the failure to render professional services by physicians and to<br>provide means whereby physicians may obtain insurance against liability therefor, subject to the<br>limitations and immunities provided in this chapter.26.1-14-02. Definitions. As used in this chapter, unless the context or subject matterotherwise requires:1."Company" means the North Dakota medical malpractice mutual insurance<br>company.2."Physician" means physician and surgeon (M.D.) and osteopathic physician and<br>surgeon (D.O.).3."Practice of medicine" means the practice of medicine, surgery, and obstetrics and<br>has the same meaning specified in subsection 2 of section 43-17-01.26.1-14-03. Authority. An incorporated mutual insurance company is authorized to beknown as the North Dakota medical malpractice mutual insurance company. The company is<br>subject to and governed by this chapter and is not subject to the laws of this state relating to<br>insurance and insurance companies except as specifically provided in this chapter.Thecompany has all the powers, privileges, and immunities granted by and is subject to all the<br>obligations imposed upon a mutual insurance company under chapters 26.1-12 and 10-33. If a<br>provision of chapter 26.1-12 or 10-33 and a provision of this chapter are both by their terms<br>applicable, the provision of this chapter controls.26.1-14-04.Board of directors - Articles of incorporation - Bylaws - Insuringpowers.1.The company will be governed by a board of directors consisting of eleven<br>members.The commissioner shall appoint the initial board within thirty days ofnotification by the state board of medical examiners of its decision for<br>implementation of this chapter from fifteen nominees proposed by that board. The<br>initial board shall serve for an initial term of seven months. Thereafter, the directors<br>must be elected by the members of the company in accordance with the articles of<br>incorporation and bylaws.2.At least seven members of the board of directors must be licensed physicians and at<br>least two members of the board must have had insurance underwriting or claims<br>handling experience.3.Within thirty days after appointment by the commissioner, the initial board of<br>directors shall prepare and file articles of incorporation and bylaws in accordance<br>with this chapter and chapter 26.1-12.4.Upon filing the articles of incorporation and bylaws with the commissioner, the<br>articles and bylaws are operative and the commissioner shall issue a certificate of<br>authority subject only to verification by the commissioner that the required initial<br>surplus of the company has been paid and all deposits have been completed.5.The certificate of authority authorizes the company to issue policies of casualty<br>insurance as follows:Page No. 1a.Insurance against liability of physicians for injury arising out of the rendering of<br>or failure to render professional services by the insured.b.Insurance against the liability of any person for whose act or omissions a<br>physician is responsible under subdivision a, or with whom the physician is<br>associated, including partners, employees, employers, associates, consultants,<br>a professional service corporation whose stock is owned by an insured, or a<br>professional service limited liability company whose membership interests are<br>owned by the insured.c.Insurance against other liabilities for injury by persons employed in, by property<br>used in, or by activities incidental to, the practice of medicine by the named<br>insured, when issued as incidental coverage with or supplemental to insurance<br>specified in subdivision a.26.1-14-05. Initial policyholders surplus - Tax - Membership fee.1.If physicians practicing medicine within North Dakota find it difficult to obtain medical<br>malpractice insurance, the state board of medical examiners, by a majority vote of<br>its membership, may elect to initiate and implement this chapter. Before fifteen days<br>from the date the election to implement this chapter is made, the board shall certify<br>to the state treasurer a list of all licensed physicians as shown in the latest record of<br>the board.2.A special one-time tax for the privilege of practicing medicine in North Dakota will be<br>levied on licensed physicians listed by the state treasurer in accordance with<br>subsection 1 in the amount of five hundred dollars per licensed physician, to be<br>levied, assessed, and collected by the state treasurer. The tax does not apply to any<br>physician who submits a statement, sworn to under penalties of perjury, stating that<br>the physician has permanently terminated the practice of medicine in the state of<br>North Dakota. The state treasurer shall prescribe the form of the statement.3.The legislative assembly appropriates and dedicates the entire proceeds of the tax<br>provided by this chapter as the initial policyholders surplus of the company, and the<br>treasurer and director of the office of management and budget shall promptly pay<br>over the proceeds of the tax to the company.4.The board of directors of the company may establish membership fees in amounts<br>as it deems reasonable to be paid by members of the company. Any physician who<br>has paid the tax specified in subsection 2 must be credited the amount of the tax<br>paid against the liability for any membership fee.5.Upon payment of the specified membership fee, a physician may be insured by the<br>company for any and all hazards customarily insured by the company, subject to any<br>limitation of coverage specified by the company in accordance with policy limitations,<br>exclusions, conditions, deductibles, and loss-sharing requirements.26.1-14-06. Minimum surplus. The minimum surplus to be maintained by the companymust be three hundred thousand dollars.26.1-14-07. Management and administration of the company.1.If, in the judgment of the board of directors, the affairs of the company thereby may<br>be administered suitably and efficiently, the company may enter into a contract, not<br>to exceed five years in duration, whereby the affairs of the company may be<br>administered by a licensed insurer or a licensed nonprofit health service plan,<br>subject to any continuing direction by the board of directors as specified in the<br>articles of incorporation, the bylaws, and the contract.Page No. 22.The basis of compensation to the administering licensed insurer or plan in any<br>contract described in this section must be reimbursement of expenses reasonably<br>allocable to the business of the company plus an appropriate and reasonable<br>additional allowance as specified in the contract. Any additional allowance, if based<br>upon premium volume or size of membership, must contain a reasonable aggregate<br>dollar maximum.The amount of the fee may not be made dependent on theunderwriting or investment profits of the company.3.Upon the execution of any contract, the company shall promptly file a copy with the<br>commissioner. The contract becomes effective thirty days from the date of the filing<br>unless the commissioner, prior to the effective date, disapproves the contract as<br>illegal, unduly onerous, or not in the best interest of the company and states the<br>reasons for the findings.26.1-14-08. Rates and rate filing. The rates and premiums to be charged for insuranceby the company are subject to chapter 26.1-25 except that the commissioner may not disapprove<br>or terminate the effectiveness of any rate filing made by or on behalf of the company on the<br>grounds that the rates or premiums are excessive.26.1-14-09. Reserves for malpractice claims.1.The reserve maintained by the company for outstanding losses under insurance<br>against injury arising out of the rendering of or the failure to render professional<br>services by an insured for all policies written during the eight years immediately<br>preceding the date of the reserve determination must be seventy percent of the<br>earned premiums of each of the eight years less all losses and loss expense<br>payments made under policies written in the corresponding years.2.In any event, the reserves for each of the eight years may not be less than the<br>aggregate of estimated unpaid losses and loss expenses for claims incurred under<br>liability policies written in the corresponding year computed on an individual case<br>basis as to cases known and reported, plus reserves in an amount estimated in the<br>aggregate to provide for the payment of all losses or claims incurred on or prior to<br>the date of valuation but not previously reported, including an amount estimated to<br>provide for the expenses of adjustment, settlement, or litigation of the losses or<br>claims.26.1-14-10. Dividends to policyholders. Every policy issued by the company mustinclude a provision that the company periodically will ascertain and apportion any divisible<br>surplus under the policy which may accrue on policy anniversaries or other dividend dates<br>specified in the contract. This provision must provide that no apportionment or payment of any<br>divisible surplus may take place until the expiration of at least eight years from the termination of<br>the policy period for which the dividend applies.This provision also must provide that thedividends may be paid only as directed by the board of directors from divisible surplus after due<br>consideration of the financial condition and operating needs of the company.26.1-14-11. Limited liability of insureds.1.Any person insured by the company for liability because of injury arising out of the<br>rendering of or the failure to render professional services in limits equal to or greater<br>than five hundred thousand dollars for each claim or suit covered, subject to an<br>aggregate limit of liability for all claims insured in a single policy period equal to or in<br>excess of one million dollars, is immune from all liability in excess of these limits,<br>and further is immune from any liability for sums owing by the company under the<br>terms of the policy regardless of whether or not the company has paid the sums.<br>The immunity established by this section applies to an insured individual,<br>professional service corporations, or professional service limited liability companies<br>notwithstanding any other provision of the law.Page No. 32.This section does not relieve an insured from the insured's personal share of liability<br>not in excess of the five hundred thousand dollar and one million dollar limitations<br>specified in subsection 1 for a loss, expense, or damage not insured by the company<br>by reason of noncoverage, exclusions, deductibles, loss-sharing provisions, or<br>conditions in the applicable policy of the company.26.1-14-12. Terms of coverage - Classifications.1.The terms and conditions of all policies issued by the company to physicians must<br>be essentially uniform in terms and coverage.2.Notwithstandingsubsection 1,thecompanymayprescribereasonableclassifications of physicians' and insureds' activities and exposures based on<br>good-faith determination of relative exposures and hazards among classifications<br>and may vary the limits, coverages, exclusions, conditions, and loss-sharing<br>provisions among classifications. Additionally, the company may describe, in the<br>case of an individual physician within a class, reasonable variations in the terms of<br>coverage including deductibles in loss-sharing provisions, based upon the insured's<br>prior loss experience and current professional training and capability.26.1-14-13. Exemption from taxation. The property, income, premiums, and activitiesof the company are exempt from all taxes and assessments and from any fees specified for<br>licenses and certifications of the insurance laws except for the tax imposed by section 26.1-03-17<br>and any assessment made by the insurance guaranty association in the event that an affirmative<br>election is held in accordance with section 26.1-14-15.26.1-14-14. Services to the company. Any licensed nonprofit health service plan byappropriate action of the board of directors or board of trustees may enter into a contract with the<br>company in accordance with section 26.1-14-07 for the furnishing of services to the company. In<br>the performance of the services under any contract, the contracting health service plan is subject<br>to the provisions of this chapter applying to the company.26.1-14-15. Optional membership in insurance guaranty association. The companymay not be a member insurer under chapter 26.1-42.1 unless the board of directors by<br>appropriate resolution, certified to and filed with the commissioner on or before December<br>thirty-first following the issuance of its certificate of authority, elects to become a member. If<br>there is an affirmative election, the company becomes a member of the insurance guaranty<br>association effective July first of the following year. The election is irrevocable. In absence of a<br>timely election, no policyholder, claimant, or creditor of the company may receive any payment<br>by the insurance guaranty association.Page No. 4Document Outlinechapter 26.1-14 medical malpractice insurance
CHAPTER 26.1-14MEDICAL MALPRACTICE INSURANCE26.1-14-01. Purpose. There is a nationwide crisis in the field of medical malpracticeinsurance and physicians practicing medicine within the state of North Dakota are finding, or will<br>find, it increasingly difficult, if not impossible, to obtain medical malpractice insurance.Thepurpose of this chapter is to provide for the payment of indemnities to persons suffering injury<br>arising out of the rendering of or the failure to render professional services by physicians and to<br>provide means whereby physicians may obtain insurance against liability therefor, subject to the<br>limitations and immunities provided in this chapter.26.1-14-02. Definitions. As used in this chapter, unless the context or subject matterotherwise requires:1."Company" means the North Dakota medical malpractice mutual insurance<br>company.2."Physician" means physician and surgeon (M.D.) and osteopathic physician and<br>surgeon (D.O.).3."Practice of medicine" means the practice of medicine, surgery, and obstetrics and<br>has the same meaning specified in subsection 2 of section 43-17-01.26.1-14-03. Authority. An incorporated mutual insurance company is authorized to beknown as the North Dakota medical malpractice mutual insurance company. The company is<br>subject to and governed by this chapter and is not subject to the laws of this state relating to<br>insurance and insurance companies except as specifically provided in this chapter.Thecompany has all the powers, privileges, and immunities granted by and is subject to all the<br>obligations imposed upon a mutual insurance company under chapters 26.1-12 and 10-33. If a<br>provision of chapter 26.1-12 or 10-33 and a provision of this chapter are both by their terms<br>applicable, the provision of this chapter controls.26.1-14-04.Board of directors - Articles of incorporation - Bylaws - Insuringpowers.1.The company will be governed by a board of directors consisting of eleven<br>members.The commissioner shall appoint the initial board within thirty days ofnotification by the state board of medical examiners of its decision for<br>implementation of this chapter from fifteen nominees proposed by that board. The<br>initial board shall serve for an initial term of seven months. Thereafter, the directors<br>must be elected by the members of the company in accordance with the articles of<br>incorporation and bylaws.2.At least seven members of the board of directors must be licensed physicians and at<br>least two members of the board must have had insurance underwriting or claims<br>handling experience.3.Within thirty days after appointment by the commissioner, the initial board of<br>directors shall prepare and file articles of incorporation and bylaws in accordance<br>with this chapter and chapter 26.1-12.4.Upon filing the articles of incorporation and bylaws with the commissioner, the<br>articles and bylaws are operative and the commissioner shall issue a certificate of<br>authority subject only to verification by the commissioner that the required initial<br>surplus of the company has been paid and all deposits have been completed.5.The certificate of authority authorizes the company to issue policies of casualty<br>insurance as follows:Page No. 1a.Insurance against liability of physicians for injury arising out of the rendering of<br>or failure to render professional services by the insured.b.Insurance against the liability of any person for whose act or omissions a<br>physician is responsible under subdivision a, or with whom the physician is<br>associated, including partners, employees, employers, associates, consultants,<br>a professional service corporation whose stock is owned by an insured, or a<br>professional service limited liability company whose membership interests are<br>owned by the insured.c.Insurance against other liabilities for injury by persons employed in, by property<br>used in, or by activities incidental to, the practice of medicine by the named<br>insured, when issued as incidental coverage with or supplemental to insurance<br>specified in subdivision a.26.1-14-05. Initial policyholders surplus - Tax - Membership fee.1.If physicians practicing medicine within North Dakota find it difficult to obtain medical<br>malpractice insurance, the state board of medical examiners, by a majority vote of<br>its membership, may elect to initiate and implement this chapter. Before fifteen days<br>from the date the election to implement this chapter is made, the board shall certify<br>to the state treasurer a list of all licensed physicians as shown in the latest record of<br>the board.2.A special one-time tax for the privilege of practicing medicine in North Dakota will be<br>levied on licensed physicians listed by the state treasurer in accordance with<br>subsection 1 in the amount of five hundred dollars per licensed physician, to be<br>levied, assessed, and collected by the state treasurer. The tax does not apply to any<br>physician who submits a statement, sworn to under penalties of perjury, stating that<br>the physician has permanently terminated the practice of medicine in the state of<br>North Dakota. The state treasurer shall prescribe the form of the statement.3.The legislative assembly appropriates and dedicates the entire proceeds of the tax<br>provided by this chapter as the initial policyholders surplus of the company, and the<br>treasurer and director of the office of management and budget shall promptly pay<br>over the proceeds of the tax to the company.4.The board of directors of the company may establish membership fees in amounts<br>as it deems reasonable to be paid by members of the company. Any physician who<br>has paid the tax specified in subsection 2 must be credited the amount of the tax<br>paid against the liability for any membership fee.5.Upon payment of the specified membership fee, a physician may be insured by the<br>company for any and all hazards customarily insured by the company, subject to any<br>limitation of coverage specified by the company in accordance with policy limitations,<br>exclusions, conditions, deductibles, and loss-sharing requirements.26.1-14-06. Minimum surplus. The minimum surplus to be maintained by the companymust be three hundred thousand dollars.26.1-14-07. Management and administration of the company.1.If, in the judgment of the board of directors, the affairs of the company thereby may<br>be administered suitably and efficiently, the company may enter into a contract, not<br>to exceed five years in duration, whereby the affairs of the company may be<br>administered by a licensed insurer or a licensed nonprofit health service plan,<br>subject to any continuing direction by the board of directors as specified in the<br>articles of incorporation, the bylaws, and the contract.Page No. 22.The basis of compensation to the administering licensed insurer or plan in any<br>contract described in this section must be reimbursement of expenses reasonably<br>allocable to the business of the company plus an appropriate and reasonable<br>additional allowance as specified in the contract. Any additional allowance, if based<br>upon premium volume or size of membership, must contain a reasonable aggregate<br>dollar maximum.The amount of the fee may not be made dependent on theunderwriting or investment profits of the company.3.Upon the execution of any contract, the company shall promptly file a copy with the<br>commissioner. The contract becomes effective thirty days from the date of the filing<br>unless the commissioner, prior to the effective date, disapproves the contract as<br>illegal, unduly onerous, or not in the best interest of the company and states the<br>reasons for the findings.26.1-14-08. Rates and rate filing. The rates and premiums to be charged for insuranceby the company are subject to chapter 26.1-25 except that the commissioner may not disapprove<br>or terminate the effectiveness of any rate filing made by or on behalf of the company on the<br>grounds that the rates or premiums are excessive.26.1-14-09. Reserves for malpractice claims.1.The reserve maintained by the company for outstanding losses under insurance<br>against injury arising out of the rendering of or the failure to render professional<br>services by an insured for all policies written during the eight years immediately<br>preceding the date of the reserve determination must be seventy percent of the<br>earned premiums of each of the eight years less all losses and loss expense<br>payments made under policies written in the corresponding years.2.In any event, the reserves for each of the eight years may not be less than the<br>aggregate of estimated unpaid losses and loss expenses for claims incurred under<br>liability policies written in the corresponding year computed on an individual case<br>basis as to cases known and reported, plus reserves in an amount estimated in the<br>aggregate to provide for the payment of all losses or claims incurred on or prior to<br>the date of valuation but not previously reported, including an amount estimated to<br>provide for the expenses of adjustment, settlement, or litigation of the losses or<br>claims.26.1-14-10. Dividends to policyholders. Every policy issued by the company mustinclude a provision that the company periodically will ascertain and apportion any divisible<br>surplus under the policy which may accrue on policy anniversaries or other dividend dates<br>specified in the contract. This provision must provide that no apportionment or payment of any<br>divisible surplus may take place until the expiration of at least eight years from the termination of<br>the policy period for which the dividend applies.This provision also must provide that thedividends may be paid only as directed by the board of directors from divisible surplus after due<br>consideration of the financial condition and operating needs of the company.26.1-14-11. Limited liability of insureds.1.Any person insured by the company for liability because of injury arising out of the<br>rendering of or the failure to render professional services in limits equal to or greater<br>than five hundred thousand dollars for each claim or suit covered, subject to an<br>aggregate limit of liability for all claims insured in a single policy period equal to or in<br>excess of one million dollars, is immune from all liability in excess of these limits,<br>and further is immune from any liability for sums owing by the company under the<br>terms of the policy regardless of whether or not the company has paid the sums.<br>The immunity established by this section applies to an insured individual,<br>professional service corporations, or professional service limited liability companies<br>notwithstanding any other provision of the law.Page No. 32.This section does not relieve an insured from the insured's personal share of liability<br>not in excess of the five hundred thousand dollar and one million dollar limitations<br>specified in subsection 1 for a loss, expense, or damage not insured by the company<br>by reason of noncoverage, exclusions, deductibles, loss-sharing provisions, or<br>conditions in the applicable policy of the company.26.1-14-12. Terms of coverage - Classifications.1.The terms and conditions of all policies issued by the company to physicians must<br>be essentially uniform in terms and coverage.2.Notwithstandingsubsection 1,thecompanymayprescribereasonableclassifications of physicians' and insureds' activities and exposures based on<br>good-faith determination of relative exposures and hazards among classifications<br>and may vary the limits, coverages, exclusions, conditions, and loss-sharing<br>provisions among classifications. Additionally, the company may describe, in the<br>case of an individual physician within a class, reasonable variations in the terms of<br>coverage including deductibles in loss-sharing provisions, based upon the insured's<br>prior loss experience and current professional training and capability.26.1-14-13. Exemption from taxation. The property, income, premiums, and activitiesof the company are exempt from all taxes and assessments and from any fees specified for<br>licenses and certifications of the insurance laws except for the tax imposed by section 26.1-03-17<br>and any assessment made by the insurance guaranty association in the event that an affirmative<br>election is held in accordance with section 26.1-14-15.26.1-14-14. Services to the company. Any licensed nonprofit health service plan byappropriate action of the board of directors or board of trustees may enter into a contract with the<br>company in accordance with section 26.1-14-07 for the furnishing of services to the company. In<br>the performance of the services under any contract, the contracting health service plan is subject<br>to the provisions of this chapter applying to the company.26.1-14-15. Optional membership in insurance guaranty association. The companymay not be a member insurer under chapter 26.1-42.1 unless the board of directors by<br>appropriate resolution, certified to and filed with the commissioner on or before December<br>thirty-first following the issuance of its certificate of authority, elects to become a member. If<br>there is an affirmative election, the company becomes a member of the insurance guaranty<br>association effective July first of the following year. The election is irrevocable. In absence of a<br>timely election, no policyholder, claimant, or creditor of the company may receive any payment<br>by the insurance guaranty association.Page No. 4Document Outlinechapter 26.1-14 medical malpractice insurance
