Louisiana officials have dropped a plan to charge risk retention groups a $1,000 fee, avoiding a confrontation over state-vs.-federal regulation of the alternative risk-transfer facilities.
The National Risk Retention Association said it received notification by letter from the Louisiana Insurance Department that risk retention groups will be exempt from paying a financial regulation fee.
The state also revised its Annual Premiums Tax Statement Form 1061 to reflect the exemption for RRGs.
If the fee had been imposed, according to the NRRA, it would have been a "direct breach of the federal Liability Risk Retention Act, which prevents states from imposing these types of fees."
The NRRA said it sent a letter on Jan. 9 to Tommy Coco, director of the Tax Division for the Louisiana Insurance Department, contesting the fee. NRRA member Risk Services, LLC sent a letter as well, the group noted.
"We appreciate that Louisiana acknowledged that this law did not apply to RRGs and promptly responded when we pointed that out," Robert H. "Skip" Myers Jr., general counsel for NRRA, told National Underwriter.
The bid to have Louisiana drop the fee is the latest in NRRA's ongoing efforts to see that the federal law for risk retention groups is upheld in all 50 states.
Mr. Myers noted that in another instance, NRRA sent a letter on Jan. 10 to the Maine Bureau of Insurance, which NRRA discovered is requiring RRGs to submit antifraud and abuse annual reports.
The letter read: "Not only does Maine lack the legal authority under the federal Liability Risk Retention Act (LRRA), 15 U.S.C. ? 3901 et seq., to require this filing, but the filing could be burdensome to RRGs due to potentially conflicting or duplicative requirements of other states."
The letter concluded that "under the LRRA, the state of domicile of the RRG is the only state that has the authority to request such a filing. Such domiciliary states would be able to satisfy any reasonable request for an antifraud plan in response to a request by Maine."
The letter continued that although the act "also specifies exceptions to this broad preemption and allows states to require RRGs to comply with particular regulations, none of the enumerated exceptions apply to Maine's antifraud plan filing requirement."
Mr. Myers said that Maine joins the list of a number of states that have been notified by NRRA that they are not abiding by the federal law. "Our position is that this cannot be done under the federal law," he said. "Then it's up to the individual RRG as to what they want to do."
Most RRGs, he said, choose to ignore the state's request. "Some will write a letter saying, 'we respectfully don't submit to what you're asking,' and sometimes they ignore it."
While the state sometimes responds that the RRG has to comply, "nobody has incurred any kind of administrative penalty," according to Mr. Myers.
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