Legislation
SECTION 29
Insurance for indemnification of directors and officers
Rural Electric Cooperative (REL) CHAPTER 77-A, ARTICLE 2
§ 29. Insurance for indemnification of directors and officers. (a)
Subject to subdivision (b) of this section, a cooperative shall have
power to purchase and maintain insurance:
(1) to indemnify the cooperative for any obligation which it incurs as
a result of the indemnification of directors and officers under the
provisions of this article, and
(2) to indemnify directors and officers in instances in which they may
be indemnified by the cooperative under the provisions of this article,
and
(3) to indemnify directors and officers in instances in which they may
not otherwise be indemnified by the cooperative under the provisions of
this article provided the contract of insurance covering such directors
and officers provides, in a manner acceptable to the superintendent of
financial services, for a retention amount and for co-insurance.
(b) No insurance under subdivision (a) of this section may provide for
any payment, other than cost of defense, to or on behalf of any director
or officer:
(1) if a judgment or other final adjudication adverse to the insured
director or officer establishes that his or her acts of active and
deliberate dishonesty were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled,
or
(2) in relation to any risk the insurance of which is prohibited under
the insurance law of this state.
(c) Insurance under paragraphs one, two and three of subdivision (a)
of this section may be included in a single contract or supplement
thereto. Retrospective rated contracts are prohibited.
(d) The corporation shall, within the time and to the persons provided
in subdivision (c) of section twenty-eight of this article, mail a
statement in respect to any insurance it has purchased or renewed under
this section, specifying the insurance carrier, date of the contract,
cost of the insurance, corporate positions insured, and a statement
explaining all sums, not previously reported in a statement to members,
paid under any indemnification insurance contract.
(e) This section is the public policy of this state to spread the risk
of cooperative management, notwithstanding any other general or special
law of this state or of any other jurisdiction, including the federal
government.
Subject to subdivision (b) of this section, a cooperative shall have
power to purchase and maintain insurance:
(1) to indemnify the cooperative for any obligation which it incurs as
a result of the indemnification of directors and officers under the
provisions of this article, and
(2) to indemnify directors and officers in instances in which they may
be indemnified by the cooperative under the provisions of this article,
and
(3) to indemnify directors and officers in instances in which they may
not otherwise be indemnified by the cooperative under the provisions of
this article provided the contract of insurance covering such directors
and officers provides, in a manner acceptable to the superintendent of
financial services, for a retention amount and for co-insurance.
(b) No insurance under subdivision (a) of this section may provide for
any payment, other than cost of defense, to or on behalf of any director
or officer:
(1) if a judgment or other final adjudication adverse to the insured
director or officer establishes that his or her acts of active and
deliberate dishonesty were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled,
or
(2) in relation to any risk the insurance of which is prohibited under
the insurance law of this state.
(c) Insurance under paragraphs one, two and three of subdivision (a)
of this section may be included in a single contract or supplement
thereto. Retrospective rated contracts are prohibited.
(d) The corporation shall, within the time and to the persons provided
in subdivision (c) of section twenty-eight of this article, mail a
statement in respect to any insurance it has purchased or renewed under
this section, specifying the insurance carrier, date of the contract,
cost of the insurance, corporate positions insured, and a statement
explaining all sums, not previously reported in a statement to members,
paid under any indemnification insurance contract.
(e) This section is the public policy of this state to spread the risk
of cooperative management, notwithstanding any other general or special
law of this state or of any other jurisdiction, including the federal
government.