A year-long legal battle with Nevada regulators haspaid off for a risk-retention group (RRG) in the form of a decisionthat should set a precedent for all RRGs, a trade associationsays.

The United States District Court for the District of Nevada inLas Vegas concluded that the Nevada Division of Insurance (NDI)overstepped its legal bounds by ordering the Alliance of Nonprofitsfor Insurance Risk Retention Group (ANI) to cease writing automobile-liability insurance policies for itsnonprofit association members.

“The case has to do with the State of Nevada not recognizingthat an authorized insurer included a risk-retention group,” saysRobert H. Myers Jr., general counsel for the National RiskRetention Association (NRRA) and a partner with Morris, Manning& Martin LLP. He adds that the case was generated by the NevadaDepartment of Motor Vehicles, which obtained “a list of 'authorizedinsurers' from the Department of Insurance.'”

The judgment is good news for ANI and for RRGs in general, Myerssays. “It should be looked at by other states as a reason why theyshould try to clear these issues up rather than take them totrial,” he notes.

ANI is an A-rated A.M. Best carrier with “lots of surplus. It'sa ridiculous one to pick on,” Myers adds. The RRG is domiciled inthe state of Vermont.

In February, the NRRA requested a federal court order to prevent the NDI fromenforcing a cease-and-desist order to prevent the RRG fromoperating in the state.

In an amicus brief, NRRA sought an injunction againstenforcement of an NDI order that would require ANI to obtain afronting arrangement with an insurance company that holds a NevadaCertificate of Authority in order to do business in the state.

The NRRA contended that ANI should be allowed to conductbusiness in Nevada under the Liability Risk Retention Act of 1986(LRRA), which authorized RRGs to do business nationally whendomiciled in a single state.