NAIC Eyes Tougher RRG Regulation
A National Association of Insurance Commissioners panel is exploring whether risk retention groups should face the same regulatory rigor for accreditation as traditional carriers.
Texas regulator Betty Patterson chairs a special Risk Retention Group Task Force that will eventually recommend what accreditation standards should apply to RRGs.
States currently have two sets of accreditation standards dealing with model laws, such as the Credit for Reinsurance Act, and others centering on solvency issues.
Ms. Patterson said the task force will be particularly interested in the model laws section.
RRGs are governed by both a federal law and state of domicile. They were set up as alternatives for insureds to get coverage when rates soared during the hard market of the mid-1980s.
Those RRGs formed as captives will be a particular target, Ms. Patterson said.
Robert Myers, general counsel for the National Risk Retention Association, said it was difficult to comment without seeing the final proposal.
“But we hope what emerges will be reasonable for RRGs, particularly as they were envisioned by the federal law that set them up,” he said.
Ms. Patterson said she hopes her group will have a final set of recommendations by the end of the year.