A statement released last week by the American Risk Retention Coalition calling for expansion of the federal Liability Risk Retention Act highlights a split in priorities within this alternative market sector, a rival group contends.
ARRC–formed earlier this year to serve as an umbrella group to advocate on behalf of risk retention groups–called for expansion of the LRRA to include additional lines of insurance such as property and excess workers' compensation.
"We see no reason why this valuable form of insurance should be limited to liability coverage," ARRC Chairman Dick Goff said in the statement. "In fact, we will recommend to Congress that 'liability' be dropped from the name of the law, to become simply the Risk Retention Act."
ARRC said it will press for expansion of insurance lines "when Congress reviews possible improvements in the LRRA, which is expected to occur this spring."
But Brian Donovan, chairman of the National Risk Retention Association, which formerly championed a push to expand the federal act, noted that ARRC's position is "kind of old news. We were dealing with this issue a year-and-a-half ago, and it appeared that it hit a dead end."
He said NRRA dropped the effort because of other pressing issues that took precedence. "That was a fight that was probably lower on our list of priorities," he said. "It's my opinion that you don't take a shotgun approach to change. You try to focus on the things that are most significant to our industry."
NRRA's current focus, he noted, is on the impact in Congress of the recent General Accountability Office report on RRGs, as well as efforts by the National Association of Insurance Commissioners to tighten state oversight. "That's really where the time and effort needs to be spent," he said. When the report was released last September, the GAO recommended that NAIC draft new rules for RRGs.
Mr. Donovan said NRRA's general concern has been that if ARRC takes on issues with "different priorities and a different focus than NRRA, all the RRG-related issues will be watered down." If expansion of LRRA were to be revisited after the other issues are resolved, "we'd certainly support the expansion, but it's out of sync with our priorities."
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