Legislation that would allow risk retention groups to provide their members with commercial property coverage as well as the current liability coverage needs some tweaking, according to the National Risk Retention Association.

In a letter to one of the bill's sponsors, Rep. Dennis Moore, D-Kan., NRRA expressed gratitude for the introduction of the bill, H.R. 5792, the Increasing Insurance Coverage Options for Consumers Act, but also raised several concerns regarding some of its provisions.

Those included the definition of commercial property insurance, the corporate governance and financial accreditation standards, and authorization of RRGs to participate in state guaranty funds.

Another alternative risk transfer organization and supporter of the legislation, the Self-Insurance Institute of America Inc., instrumental in forming the American Risk Retention Coalition (ARRC), to see to the extension of the Liability Risk Retention Act, sought to assuage NRRA's concerns.

SIIA said the points at issue have already been recognized and are receiving due attention.

Cliff Roberti, director of government relations for SIIA, also chastised NRRA for not taking a more active role in the process.

“Although the NRRA has valid concerns, if they were involved with the legislative process they would know that these issues were already in the process of being addressed” by Rep. Moore and the bill's co-sponsor, Rep. Deborah Pryce, R-Ohio, Mr. Roberti said.

NRRA general counsel Robert H. Myers, however, said “We've been involved quite substantially.” He added that NRRA had submitted proposed language to Reps. Moore and Pryce, but that it had not been taken up in the areas that have raised their concerns.

In seeking changes, he said NRRA was doing nothing more than “exercising our first amendment right” by voicing its concerns. “This is all part of the process;” Mr. Myers said, “and you don't get what you don't ask for.”

He added that he “can understand why the SIIA might not like our suggestions,” but also sought to make clear that his comments should not be seen as criticism of any of the other players involved. “We don't mean this in any other way than being constructive” he said of the letter and its proposed revisions to the bill.

On the call to change language crafted by the NAIC, he said that NRRA was “involved closely with the NAIC” to draft that language, which was “adequate” for state model law, but he said the same wording did not “translate well to a federal bill.”

Among NRRA's primary concerns is the definition of the term “commercial property insurance” in the bill itself. “We believe that the current definition is confusing and may lead to a misconstruction of the intended purpose of that act,” Mr. Myers said in the letter.

In the legislation, commercial property insurance is defined as “commercial lines of real or personal property insurance, including, with regard to excess insurance, insurance against loss or damage from any and all hazard or cause and against loss consequential upon such loss or damage, including business interruption insurance, other than noncontractual legal liability for such loss or damage.”

Additionally, NRRA sought greater clarity in the provisions of the bill relating to corporate governance and financial accreditation standards.

It noted in the letter that the language was taken from standards crafted among state regulators. “NRRA was an active participant in the development of the corporate governance standards at the National Association of Insurance Commissioners,” Mr. Myers said. “However, we believe that including these standards verbatim in the federal legislation is a mistake.”

Mr. Myers also stated in the letter that NRRA stands by the principles represented in the standards but believes they can be “better articulated in legislative language that will be less confusing and more instructive.”

On an operational level, the association expressed opposition to language in the bill that would authorize RRGs to take part in insurance insolvency guaranty associations that include other RRGs, noting that both the 1981 Product Liability Risk Retention Act and the later Liability Risk Retention Act both prohibited RRGs from taking part in state guaranty funds.

“This is a position that has been supported by the insurance industry as well as the alternative risk transfer community,” according to the letter.

The bill, HR 5792, was introduced in the House in April. It was referred to the House Financial Services Committee, of which Rep. Moore is a member, and is awaiting action. There is currently no companion bill in the Senate.

NRRA said in the letter it “supports and appreciates your introduction of HR 5792. We hope to provide additional information to your staff and others involved in the legislative process to further refine this important piece of legislation.”

Special Reports /

NRRA Voices Concerns About RRG Expansion Bill

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