The American Risk Retention Coalition in an open letter to leaders of the National Association of Insurance Commissioners has told them in effect not to mess with current risk retention group regulations.
Their message came as the NAIC is deliberating what recommendations to make to Congress regarding new rules for risk retention groups.
The letter, written by ARRC Chairman Dick Goff, emphasized the value of RRGs in providing liability protection for many professions and trades and summarizes ARRC's position on maintaining the provisions of the federal Liability Risk Retention Act of 1986.
The letter was addressed to L. Tim Wagner, chairman of the NAIC Risk Retention Working Group, and Betty Paterson, who chairs the NAIC Risk Retention Group Task Force. It states that ARRC "hopes to preserve the current state-based regulatory structure of RRGs under the format established by the federal Liability Risk Retention Act of 1986."
The letter continues that it is not ARRC's agenda "to pursue full federal regulation of RRGs by a new federal bureaucracy. State regulation with a single point of entry provides the most efficient licensing and oversight system, we believe, for governance of RRGs."
The letter also emphasized that the fundamental differences between RRGs and commercial insurance companies is that coverage underwritten by RRGs is provided only to the RRG owners and is not offered to the general public.
"The RRG model has provided financial salvation to professions and trades, most notably in the medical malpractice arena where the availability of insurance was most problematic," the letter states.
It adds that, "RRGs do not have the financial resources of commercial insurance companies that can afford the costs attendant to regulation in each state of operation. Any change in preemption or accounting standards would be disastrous for most RRGs."
The letter offers testimony and comment from two RRG owners: Larry Smith, vice president of risk management for MedStar Health, a $2.7 billion network of seven hospitals in the Baltimore-Washington, D.C. area; and Michael Gerardi, president of Superior Insurance Company of Livingston, N.J., which covers the 250-provider emergency Medical Associates Inc.
ARRC, a stand-alone unit of the Self-Insurance Institute of America Inc. (SIIA), was launched last month to help protect risk retention groups from changes in their legal status.
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