A representative of the risk-retention industry as well as the Property Casualty Insurers Association of America today urged Congress to expand the Risk Retention Act to allow risk-retention groups to expand coverage to all commercial property and casualty lines except workers' compensation.
These would include auto physical damage, business interruption, and cyber-liability insurance.
The legislation is the Risk Retention Modernization Act of 2014. Its chief sponsor is Rep. Dennis Ross, R-Fla.
Joe E. Carter, vice president of United Educators Insurance, an RRG based in Chevy Chase, Md., said allowing RRGs to increase their offerings would increase efficiencies for RRGs so that they will no longer be forced to seek coverage elsewhere for commercial lines that RRGs cannot offer.
Carter made his comments at a hearing on proposals to reform domestic insurance policy held by the Subcommittee on Housing and Insurance of the House Financial Services Committee.
Carter also said the proposal, which has been put forward for a number of years, would also enable independent brokers and agents "to gain efficiencies by offering package policies for all property and casualty exposures to churches, nonprofits, schools and universities and other organizations that typically buy package policies that don't include tailored risk-management programs."
He also said enactment of such legislation would facilitate improved coverage and risk management for other lines of commercial insurance for the churches, educational institutions, nonprofits, medical groups, and others who purchase insurance through RRGs as well as lower the overall cost of risk to RRGs and their members.
A PCI statement indicated support for such legislation as long as an RRG meets certain stipulations, such as having been a state-licensed insurer for at least five consecutive years and maintaining at least $5 million in capital and surplus.
"PCI's principles of good insurance regulation include the recognition of a wide variety of property-casualty business models to increase private competition," its statement said. "Expanding the ability of RRGs to offer coverage with appropriate regulatory oversight and protections can expand competition for consumers," the statement added.
PCI also said it would allow RRGs to offer property insurance only with a host of other stipulations, including not allowing RRGs to be members of state guaranty funds.
Carter said the bill has the support of the Vermont Captive Insurance Association (VCIA) and the Risk and Insurance Management Society (RIMS).
The Independent Insurance Agents and Brokers of America issued a statement indicating that it has "several questions and concerns as a result of our initial review of the proposal."
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