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Committee hears bill to move state bonding fund administration from Insurance to OMB
Summary
House Bill 1026 would transfer administration of the State Bonding Fund from the Insurance Commissioner to the Office of Management and Budget and requires a multi‑year contract for administrative services if current contractor services end.
Representative Emily O’Brien of Grand Forks presented House Bill 1026, the bill to change administration of the State Bonding Fund from the Insurance Commissioner to the Office of Management and Budget (OMB). She said the proposal follows an interim review and a sister bill concerning the State Fire and Tornado Fund that the committee heard the previous day.
O’Brien summarized the bill’s intent: to remove obsolete language, update cross‑references and give OMB authority to administer the bonding fund and contract out administrative services if the current contractor does not continue. She said the change was prompted by concerns about a conflict when the Insurance Department both regulated a contractor and contracted with it to administer funds.
Deputy Insurance Commissioner John Godfrey (appearing for the Insurance Commissioner) testified in support of transferring the bonding fund to OMB, saying the same conflict concerns that applied to the fire and tornado fund also apply to the bonding fund and recommending the committee adopt the change. He noted that the bonding fund insures liability from embezzlement by public employees while the fire and tornado fund insures property losses.
OMB director representatives testified neutral. Todd Anderson, director of OMB’s risk management division, said OMB lacks the staff and IT resources to directly administer the funds if the contract with the North Dakota Insurance Reserve Fund (NDIRF) were to end, and that OMB’s preferred approach would be contracting for administration but retaining oversight. Keith Peach, CEO of the North Dakota Insurance Reserve Fund, testified neutral and said NDIRF has administered the funds under contract since 2019 and would like to continue doing so.
Frank Mikhail of Trust Lands — who also testified earlier on investment questions — told the committee that the board of University and School Lands already has authority to set asset allocations and that the land board has previously held commodities exposures; his remarks emphasized that trustees have existing authority for allocation decisions.
Committee members asked whether OMB is the best home for the funds; OMB witnesses said the agency already administers the risk management fund but lacks the staffing to directly underwrite commercial insurance policies and prefers to contract administration. The transcript records no committee vote on the bill during the hearing.
Ending: The bill was presented, supporters and neutral parties described operational and governance considerations, and the committee closed the hearing pending any further action.
