Congress To Mull Bill Allowing RRGs To Sell Commercial Property Insurance

Mr. Ferguson said that additional sponsors are being sought in both the House and Senate because most members of Congress "see this as a bi-partisan bill."

Sen. Tester called it "common-sense legislation."

The legislation is similar to a bill introduced only in the House in the last Congress.

Sen. Tester said he is sponsoring the legislation as a test to see whether the risk retention model can fill some of the voids in the insurance market.

He added, "I think the risk retention model has worked pretty well. It has injected additional flexibility, affordability and competition into the marketplace."

He said that consumer groups and others in the insurance industry have indicated that including commercial property coverage in addition to liability insurance "would increase access and reduce costs in areas of the country that have issues with access and capacity."

The bill would also create new uniform, baseline corporate governance standards for risk retention groups, and would give the Treasury Department broad new powers to oversee the industry.

Specifically, under the legislation Treasury would have the authority to review disputes between RRGs and non-domiciliary state regulators and offer interpretations regarding the Risk Retention Act.

These would include the authority to publish minimum corporate governance standards for RRGs. Also, under the bill, Treasury rules would have to deal with compliance, business conduct and ethics standards.

The bill would require RRGs to prepare financial statements that conform to statutory accounting principles, and would also mandate enhanced disclosure to its member-owners.

It is similar to legislation introduced in the House in 2008. Its supporters include the Self-Insurance Institute of America, the National Risk Retention Association and the Risk and Insurance Management Society.