Section 0780-01-54-.06 - BOARD OF TRUSTEES(1) Each pool shall be operated by a board of trustees which shall consist of not less than five (5) persons whom the members of a pool elect for stated terms of office. No less than two-thirds (2/3) of the members of the board shall be comprised of members of the pool. The pool's administrator and any owner, officer, employee of, or any other person affiliated or contracting with the administrator shall not serve on the board of trustees unless the administrator is a wholly-owned subsidiary of the sponsoring association, whose directors are simultaneously trustees of the pool and members of the pool and all serve without compensation and expense reimbursement. All members of the board of trustees shall be residents of this State or officers of corporations authorized to do business in this State. The board of trustees of each pool shall ensure that all claims are paid promptly and take all necessary precautions to safeguard the assets of the pool.(2) The board of trustees shall:(a) Maintain responsibility for all monies collected or disbursed from the pool.(b) Conduct regular meetings, maintain minutes of such meetings and make such minutes available to the Commissioner. The board of trustees shall meet no less than once every quarter.(c) Have the sole and undelegable authority to approve an application for membership into the pool and the initial premium of a new member.1. The board of trustees may choose to delegate the decision to admit new members into the pool to one (1) or more board members as long as those board members are also members of the pool.2. The decision whether to accept new members into the pool must be based on the pool's approved underwriting guidelines.3. The entire board of trustees remains liable for the decision to appoint new members even if that decision is delegated to one (1) or more board members.(d) Establish an investment policy for the pool. Such policy shall address credit, quality of investments, maximum maturity of investments and such other matters as the board deems appropriate.(e) Designate an administrator to carry out the policies established by the board of trustees and to provide daily management of the pool. The areas of authority delegated to the administrator must be delineated in the written minutes of its meetings or in the written contract between the pool and the administrator.(f) Appoint a third party administrator, should the board in its discretion desire to do so, for certain daily operations of the pool to be delegated.(g) Retain an independent certified public accountant to prepare the statement of financial condition required by Rule 0780-01-54-.09.(3) The board of trustees shall not:(a) Extend credit to individual members for payment of premium, except pursuant to payment plans approved in writing by the Commissioner prior to the extension of credit; or(b) Allow anyone to borrow monies from the pool.(4) Each pool shall include in its bylaws or articles of incorporation the method by which a trustee can be replaced or terminated.Tenn. Comp. R. & Regs. 0780-01-54-.06
Original rule filed April 8, 1986; effective May 8, 1986. Repeal and new rule filed August 31, 2005; effective November 14, 2005.Authority: T.C.A. §§ 50-6-405(c) and (h).