RRG Expansion Gains Traction In House

A risk retention group coalition has reportedly been given the go-ahead by key House legislators to draft bipartisan legislation that would expand the scope of the alternative market facilities to cover property exposures.

Cliff Roberti–recently added to the staff of the American Risk Retention Coalition, formed specifically to advance expansion of the federal Liability Risk Retention Act–said the go-ahead from key members of the House Financial Services Committee is a breakthrough.

The green light to proceed was given by staffers representing Rep. Paul Kanjorski, D-Pa., and Rep. Deborah Pryce, R-Ohio, the chairman and ranking minority member, respectively, of the Capital Markets Subcommittee, according to Mr. Roberti.

The news culminates a four-year effort by several groups, including the National Risk Retention Association, to expand LRRA–the law of the land since 1986, said Mr. Roberti, who also is director of government relations for the Self-Insurance Institute of America.

Risk retention groups created under the 1986 law are limited to providing liability insurance. RRGs are structured as corporations or limited liability associations that function as captive insurance companies for member-owners.

In late March, Janice M. Abraham–former NRRA board member and president and chief executive officer of United Educators Insurance, an RRG created in 1987–introduced testimony on LRRA expansion to the House Subcommittee on Housing and Community Opportunity, chaired by Rep. Maxine Waters, D-Calif.

Mr. Roberti noted that there is a “strong consensus” between his group, staffers and members of the House Financial Services Committee. However, approval of the draft and the need for committee members to sign on as sponsors leave him cautious as to the exact timing of introduction, he added.

“We've had members of Congress show interest, but talks have not reached the point where they have agreed to sign on,” he said.

A factor that helped achieve the change of heart in Congress on the issue is the proposition that RRGs could help companies in coastal areas better manage the soaring cost of property coverage, Mr. Roberti said.

The alternative risk-transfer and self-insurance sector has been seeking to expand the types of coverage RRGs can provide for the last four years to include property and excess workers' compensation because there is a growing need for affordable coverage in these lines, he said.

Mr. Roberti is familiar with this territory on Capitol Hill, having worked for a year on the majority staff of the House Financial Services Committee, leaving when Democrats took over in January. Before that, he worked for several years as an investment banker at UBS in New York.