NU Online News Service, March 23, 2:52 p.m.EDT

States continue to interfere with the lawful operation of riskretention groups and federal legislation is needed to stop thepractice, the National Risk Retention Association is telling theGovernment Accountability Office.

The NRRA is voicing its concerns at the same time a rival group,the Self-Insurance Institute of America, has persuaded members ofCongress in both houses to propose legislation that should beintroduced soon designed to deal with the concerns raised by theNRRA letter.

"The Liability Risk Retention Act (LRRA) of 1986 gave RRGsfreedom to do business nationally when licensed in a single state,but as the industry grew, some states imposed burdensomerequirements on RRGs that violate the will of Congress," says BrianBraley, NRRA chairman.

"Unfortunately, the law did not provide for enforcement, but inthe face of continued actions by some states, it's time to amendthe LRRA to allow RRGs to function as Congress intended," Braleysays.

Robert Myers, NRRA general counsel, expressed the group'sconcerns in a letter to the GAO.

The letter by Myers cites burdensome requirements placed on RRGoperations by some states in violation of the federal law.

According to Jay Fahrer, SIIA director of government relations,the NRRA concerns would be addressed by legislation that will soonbe introduced by Sen. John Tester, D-Mont., in the Senate, and Rep.John Campbell, R-Calif., in the House.

The bill would allow risk retention groups to sell commercialproperty insurance, and would also establish a mechanism to resolvedisputes between non-domiciliary states and RRGs by assigning broadmediation powers to the Treasury Department.

Myers' letter cites impediments to uniform RRG regulation by "anumber of states" which impose unlawful registration requirementsthat "delay, prevent or otherwise impede RRG operations."

He says these include fees for filing and renewal, causingdelays that take new RRGs many months to resolve before they can dobusiness, and multiple rounds of requests for information alreadyprovided to the state in which the RRG is licensed.

He also cites discriminatory practices by some states despitethe fact these are prohibited by the national law.

He says the industry has worked with the states and the NationalAssociation of Insurance Commissioners to explain that theirregulatory actions are not consistent with the federal law, butthat the results have been discouraging.

He adds that the LRRA is one of the few federal laws without anyfederal agency oversight, and he voices support in the letter forthe legislation that will soon be introduced by Sen. Testor andRep. Campbell.

Fahrer says that the cases cited by NRRA in its letter to theGOA are similar to the examples that have been documented bySIIA.

"They are clear evidence on why this legislation is sonecessary," he says.

"If enacted, RRGs would have a much better ability to providetheir members more expansive and more cost-efficient lines ofcoverage."