House Bill Would Allow Property Insurance Sales By RRGs 

NU Online News Service, March 9, 3:50 p.m. EST

WASHINGTON—Legislation will be introduced in the House allowing risk retention groups to sell commercial property insurance, according to an industry source.

Risk retention groups, permitted under the 1986 Risk Retention Act, are businesses banded together to form a self-insurance  organization and licensed in at least one  state, but are currently limited to offering liability insurance with the exception of workers’ compensation.

The proposed measure, it was learned, will be titled the “Risk Retention Modernization Act of 2010,” and would create new uniform, baseline corporate governance standards for risk retention groups as well as establish a mechanism to resolve disputes between non-domiciliary states and RRGs.

Under the legislation the Treasury Department would be given broad new powers to oversee the industry with authority to review disputes between risk retention groups and regulators in states where they are not domiciled and offer interpretations regarding the Risk Retention Act.

These would include the authority to publish minimum corporate governance standards for RRGs. Also, under the bill, Treasury rules would also have to deal with compliance, business conduct and ethics standards.

The bill, according to the source, will  be introduced by Rep. Dennis Moore, D-Kan., and Rep. John Campbell, R-Calif.

It is similar to legislation introduced in 2008 in the House. Its supporters include the Self-Insurance Institute of America, the National Risk Retention Association, and  the Risk and Insurance Management Society.

SIIA officials said its members will be in town Thursday for the trade group’s annual legislative conference and plan to ask members of the House to approve the bill as soon as possible.

The bill would also require RRGs to prepare financial statements that conform to statutory accounting principles and mandates enhanced disclosure to its member-owners.

• • 3/10/2010 12:37:39 PM
  • Mark
  • RRGs selling property insurance
  • RRGs are not subject to any meaningful regulation. Many are under capitalized. Because they do not participate in in the state guaranty funds (a choice for which they they lobbied long and hard), people who purchase coverage from RRGs have NO protection in the event their RRG fails and cannot pay their claims. If RRGs are going to start acting like multi-line insurance companies, they ought to be regulated like them so that consumers don't end up without recourse if (when?) they fail. At the very least, RRGs ought to be required to create a guaranty fund system to provide protection for the people who purchase coverage from them. Alternatively, the people buying property insurance form RRGS out to be required to sign an affidavit stating that they understand there is NO state or federal backup system for them, and NO guaranty fund coverage if their RRG fails.
• • 3/10/2010 2:51:16 PM
  • Carol
  • RRG regulation by Treasury
  • The Treasury Dept can't competently regulate what they are already supposed to regulate. States do a much better job!
• • 3/11/2010 9:21:25 AM
  • Michael Mead
  • RRG bill
  • There are some good, needed points in this bill such as better coordination between domiciliary and non-domiciliary states but I doubt that it is actually going anywhere.

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