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Secretary of State and actuaries push solvency guardrails for pooled risk programs; stakeholders debate model
Summary
The House Commerce Committee heard hours of testimony on Senate Bill 297, which would set contingency reserve ranges, reporting requirements and emergency assessment powers for public entity pooled risk programs under RSA 5‑B following recent losses and an NHIT closure announcement.
The House Commerce Committee held a lengthy hearing on Senate Bill 297, a proposal to add solvency guardrails, reporting requirements and emergency assessment mechanisms for public entity pooled risk management programs governed by RSA 5‑B.
Secretary of State David Scanlon said the bill responds to a two-year sequence of financial stress in pooled public risk programs, including the unexpected closure announcement this month by one pool, New Hampshire Interlocal Trust (NHIT). "Back in 2023, HealthTrust came into my office and self-reported that there were financial concerns about the level of reserves they had on hand to be able to pay their claims," Scanlon said. The secretary’s office commissioned actuarial analyses and worked with stakeholders to craft the bill.
The measure would establish a contingency-reserve target range for health lines (12%–16% of expected claims and administration costs, with a constrained option to request up to 18%) and a higher range for property and casualty lines (30%–40%). If reserves drop to warning levels (8%) the bill would trigger heightened review, and a lower trigger (4%) would authorize emergency assessment processes and allow the secretary to seek court-ordered receivership in extreme cases. The bill also proposes a restricted “break-glass” fund — up to 4% of previous-year contributions, sourced from earnings and surplus — that pools could elect to hold to smooth potential assessments.
Secretary Scanlon and the bill’s outside counsel, Christina Ferrari, described the provisions as narrowly tailored guardrails that preserve member ownership and local control while introducing early-warning tools and defined remediation steps. Actuaries who worked for the secretary’s office said modeling shows the contingency ranges would substantially reduce insolvency risk.
Risk-pool representatives, notably HealthTrust, urged a different approach. HealthTrust’s executive director Scott Duroch said the proposed 12%–16% health contingency range and the bill’s emphasis on assessments would undercapitalise some pool models and leave members exposed to mid-year rate shocks and benefit disruptions. HealthTrust cited prior experience in which its contingency reserve fell sharply after a surge in claims; the trust said it has implemented a multi-year rebuild plan and argued that a risk‑based capital model tied to actuarial measures like IBNR and loss development would be a more defensible approach.
Local government groups and municipal officials urged caution and asked for more analysis. The New Hampshire Municipal Association opposed the bill as drafted and supported an amendment to move regulation to the Insurance Department; municipal officials warned that forced assessments or surprise replenishments would be difficult for town budgets to absorb. Several municipal and county officials described urgent, near-term budget impacts as pools reprice coverage.
Supporters said the bill is intended to stop a cycle of underpricing and surprise deficits that have left political subdivisions exposed; opponents said the drafting risks unintended consequences and that an insurance‑department regulatory model (using NAIC risk‑based capital principles) might be preferable. The committee did not vote; testimony indicated ongoing negotiations and a draft Secretary of State amendment that would let pools keep a restricted assessment fund at the pool level rather than forcing every member to hold separate municipal funds.
Why it matters: Pooled risk programs cover millions of dollars in municipal assets and tens of thousands of lives; insolvency or disorderly wind‑up can create serious coverage gaps and unanticipated costs for towns, schools and taxpayers.
What’s next: Committee work sessions to consider revisions; stakeholders signaled interest in exploring an alternative model using industry-standard risk-based capital methods or moving oversight to the Department of Insurance, though several panelists said a statutory interim solution is needed quickly for orderly wind‑ups.
