Last week, Rep. Dennis Ross (R-Florida) introduced H.R. 6292, to amend the Liability Risk Retention Act (LRRA) to expand the types of commercial insurance that risk retention groups (RRGs) can offer to nonprofit organizations. Reps. Bill Posey (R-Florida), Tom MacArthur (R-New Jersey) and Mia Love (R-Utah) co-sponsored the bill.
Rep. Ross has previously championed similar proposals, but they have not garnered widespread support. The bill seeks to allow some RRGs to offer commercial property and auto insurance to nonprofit organizations under certain circumstances. The bill also requires state insurance regulators to certify the availability of specific insurance products in their state.
Currently, RRGs are only permitted to provide commercial liability coverage to their customers. The LRRA was enacted by Congress in 1986 to address the significant liability insurance crisis that plagued the U.S. economy during the early-to-mid 1980s. The LRRA broadly preempts state insurance law and subjects RRGs to a much less rigorous level of regulatory oversight than traditional commercial insurers and their agent distribution force face.
The Big “I” understands the importance of having readily available insurance coverage options for nonprofits, but opposes such significant preemption of state law to allow RRGs to provide commercial property or auto insurance because:
Finally, if there are regulatory conditions in state insurance markets that make it difficult to find certain types of insurance coverage, policymakers should address those issues at the state level. The National Association of Insurance Commissioners agrees and also generally opposes the expansion of RRGs. The Big “I” supports competitive state insurance markets and encourages Congress not to pick winners and losers in the marketplace by further preempting state solvency and consumer protection laws.
Jennifer Webb is Big “I” federal government affairs counsel.