Louisiana officials have informed a risk retention group tradeorganization that a plan to charge RRGs a $1,000 fee has beendropped.

The National Risk Retention Association said it receivednotification by letter from the Louisiana Insurance Departmentinforming that risk retention groups will be exempt from paying afinancial regulation fee. The State of Louisiana also revised theAnnual Premiums Tax Statement Form 1061 to reflect the exemptionfor RRGs.

NRRA said if the fee had been imposed it would have been a"direct breach of the federal Liability Risk Retention Act, whichprevents states from imposing these types of fees."

NRRA said it sent a letter to Tommy Coco, director of the TaxDivision for the Louisiana Department of Insurance, on Jan. 9,contesting the fee. NRRA member Risk Services, LLC sent a letter aswell, NRRA said.

"We appreciate that Louisiana acknowledged that this law did notapply to RRGs and promptly responded when we pointed that out,"Robert H. 'Skip' Myers Jr., general counsel for NRRA, told NationalUnderwriter.

The effort to have Louisiana drop the fee is the latest inNRRA's ongoing efforts to see that the federal law for riskretention groups is upheld in the 50 states.

Mr. Myers noted that in another instance, NRRA sent a letter,Jan. 10, to the Maine Bureau of Insurance, which NRRA discovered isrequiring RRGs to submit antifraud and abuse annual reports.

The letter read: "Not only does Maine lack the legal authorityunder the federal Liability Risk Retention Act (LRRA), 15 U.S.C. ?3901 et seq., to require this filing, but the filing could beburdensome to RRGs due to potentially conflicting or duplicativerequirements of other states.

"Finally, under the LRRA, the state of domicile of the RRG isthe only state that has the authority to request such a filing.Such domiciliary states would be able to satisfy any reasonablerequest for an antifraud plan in response to a request byMaine."

The letter continued that although the act "also specifiesexceptions to this broad preemption and allows states to requireRRGs to comply with particular regulations, none of the enumeratedexceptions apply to Maine's antifraud plan filing requirement."

Mr. Myers said that Maine joins the list of a number of statesthat have been notified by NRRA that they are not abiding by thefederal law.

"Our position is that this cannot be done under the federallaw," he said. "Then it's up to the individual RRG as to what theywant to do."

Most of the RRGs, he said, choose to ignore the state's request."Some will write a letter saying 'we respectfully don't submit towhat you're asking,' and sometimes they ignore it."

While the state sometimes responds that the RRG has to comply,"nobody has incurred any kind of administrative penalty," Mr. Myerssaid.