Mr. Myers, managing partner in the Washington office of Morris, Manning & Martin, said two of the states where issues are emerging are Massachusetts, which is seeking to require RRGs to "register," and New York, where efforts to thwart the efforts of J. M. Woodworth Risk Retention Group have become "grist for the legal mill."
Mr. Myers and other speakers at the seminar cited cases over the years, which have required lawyers and others affiliated with NRRA to continuously respond to state requirements of RRGs beyond those permitted by the federal Liability Risk Retention Act of 1986.
While this law exempts RRGs from any state law or rule designed to regulate the operations of risk retention groups, several court decisions have backed the efforts of state regulators to increase oversight, the panelists said.
Regarding Massachusetts and its requirements of RRGs, the registration issue started with election of a new, Democratic governor whose insurance commissioner demanded that RRGs register, the panelists said.
The state regulators, they said, believed RRGs should start by with filling out the same detailed uniform application needed to become a licensed insurance company.
When RRGs, including members and officials of the NRRA, voiced objections to this, the regulators dropped this requirement, the panelists said.
But they still are insisting on having full biographical information on officials of RRGs doing business in the state, specifically NAIC biographical affidavits for officers and directors, is a requirement that has raised hackles within the industry.
Vermont, the largest U.S. captive domicile and home state of many RRGs, stepped in, saying it would provide such information–but only in confidence–in supporting the RRGs. Some RRGs are complying, according to Mr. Myers and Mr. Johnson. One concern is that such information may be lost, a breach of security and privacy, they said.
Massachusetts also demanded an RRG renewal application be filled out. But as the panelists noted, only information specifically required by the LRRA should be required. This includes a plan of operation, including a feasibility study and amendments to the bylaws, as well as an annual financial statement.
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