News

April 10, 2014

FEDERAL APPEALS COURT RULES LIABILITY RISK RETENTION ACT PREEMPTS NEW YORK DIRECT ACTION STATUTE

 

New York, NY -- The U.S. Second Circuit Court of Appeals in a ruling last week held that the federal Liability Risk Retention Act (LRRA) categorically preempts a New York State statute that allows a direct action lawsuit against a risk retention group.

"The federal Liability Risk Retention Act of 1986 contains sweeping preemption language that sharply limits the authority of states to regulate, directly or indirectly, the operation of risk retention groups chartered in another state," Circuit Court Judge Gerard Lynch wrote in his opinion upholding the District Court judgment.

"The dispute in question arose from an attempt to enforce a direct action statute against Allied Professionals Insurance Company, A Risk Retention Group (APIC)," said APIC attorney Rick Cigel. "It was the position of APIC that under the Liability Risk Retention Act, a state such as New York cannot apply such a statute to a risk retention group that is not domiciled in New York. APIC is domiciled in Arizona but has over 4,000 insureds in New York."

Michael Schroeder, Chairman of APIC, said: "We are gratified by the Court's ruling. A number of states attempt to impose unreasonable and illegal forms of regulation on risk retention groups. This resounding court decision at the appellate level confirms that this attempt to apply state law to a risk retention group licensed in another state is illegal."

The National Risk Retention Association (NRRA) had filed an Amicus Brief in support of APIC before the District Court. Sanford Elsass, Chairman of NRRA, hailed the Circuit Court decision, stating that, "This decision is a huge win for the industry. It can be used in other cases involving existing state laws, proposed legislation, and regulatory violations. This ruling is an unqualified affirmation of the preemption provisions of the LRRA that allow risk retention groups to do business nationally with only limited regulation by states other than the state in which they are licensed."

In the underlying case, APIC denied renewal of coverage to a chiropractor insured who failed to disclose that he had sexually molested one of his patients. The patient secured a judgment against the chiropractor and then proceeded to file suit against APIC under the New York State direct action statute. The District Court and the Circuit Court of Appeals have now ruled that under the federal law the direct action statute cannot be applied to a risk retention group.

February 13, 2014

HOT TOPICS PLANNED FOR 2014 CONFERENCE IN CHICAGO

Plans for NRRA’s 2014 Conference -- to be held in Chicago for the first time -- are moving ahead with hot topics on the agenda. The Conference is scheduled for September 30 through October 2 at the luxurious Sofitel Hotel on the city’s Gold Coast.

“After holding the Conference in Washington, DC, for the last several years, we chose Chicago this year for its central location easily accessible to members from all parts of the country. Early Fall is a great time of year in Chicago, and the Sofitel is close to five-star restaurants, shopping, museums and other attractions for attendees to enjoy,” said Rod Nofziger, Conference Chairman.

A major session will be devoted to the future direction of Risk Retention Groups as an industry in the face of slow growth with no early end in sight for the soft market. Industry executives, analysts and regulators will assess the outlook and offer advice on how to navigate the road ahead. Other hot topics include the increasingly important issue of Cyber Security for RRGs and the developing impact of the Affordable Care Act on RRGs in the healthcare sector.

“The Conference Committee will be developing the program over the next few weeks. We welcome suggestions from our members on subjects that are important to their operations,” Nofziger said. Suggestions should be directed to Executive Director Joe Deems (joe.deems@gmail.com). Major speakers and a host of expert panels on a wide variety of topics essential to RRGs and PGS will be assembled over the next couple of months.


Registration information will be published soon on our website, 
www.riskretention.org. Please put the dates on your calendar now.

DEATH OF PATRICK TUOHY, INSURANCE INDUSTRY LEADER AND FRIEND OF NRRA, REPORTED

“We lost a great friend of our Association with the untimely passing of Patrick Tuohy,” saidSanford Elsass, Chairman of the NRRA Board. “Over the years, we enjoyed working with him and we’re saddened by his passing.”

Tuohy had been Senior Vice President of Prime Advisors, Inc. Over the past 30 years, he held senior positions at Brookfield Asset Management, American Re Asset Management and Prudential Home Mortgage. He graduated from the Columbia University School of Business and Bernard Baruch, CUNY.


PGs HIT PEAK IN 2013

Purchasing Groups topped out at 912 in 2013 with 47 new groups and 14 that closed down, according to the Risk Retention Reporter.

“Despite the volatility in the greater insurance marketplace, Purchasing Groups have been growing quite steadily since 2005,” RRR reported. Healthcare accounted for 16 of the new groups, followed by property development with 11. Thirteen of the new PGs registered in Delaware, followed by Illinois with seven and Texas with six.


RECORD NUMBER OF RRGs CLOSED 
AND INSOLVENCIES PEAKED IN 2013

The RRG marketplace hit a bump in 2013 with retirements up, formations down and the largest number of insolvencies in a single year since the Liability Risk Retention Act of 1986 launched the industry, according to the Risk Retention Reporter’s year-end statistical journal.

Twenty-one RRGs ceased operations while only 10 were licensed. Six RRGs became insolvent, compared with one or two in most years. Of the 15 that closed, eight dissolved voluntarily, one never became operational and six closed due to mergers. Seven of the newly formed groups and nine of the retired groups, were in healthcare.

THE RRG MARKETPLACE TODAY -- WHAT’S HAPPENING?

In a recent interview, David Provost, Vermont Deputy Commissioner, Captive Insurance Division and a leading authority on RRGs, said, “I think the collection of RRGs will continue to outperform the industry in 2014.” As for slow growth and a spike in insolvencies, Provost observed, “I really look at the number of insolvencies in 2013 as an aberration and see little correlation among them. I look at some decrease in formations as simply a market that has matured.”

Sanford Elsass, Chairman of the National Risk Retention Association, pointed to exit issues for smaller RRGs, continuing opposition to RRGs by a few hostile states and the pressure being brought to bear on insurance departments by cash-strapped state governments to pay for their operations by hiking up fees as major issues facing the industry in 2014. “Without an exit strategy and a succession plan, it will be increasingly difficult for smaller RRGs to realize their equity under current market conditions,” Elsass said.

Robert H. Myers, Managing Partner in the Washington, DC office of Morris, Manning & Martin, LLP and General Counsel of NRRA, identified a move by the National Association of Insurance Commissioners to treat captive reinsurers as standard reinsurers as a new issue in 2014. According to Myers, “wrapping captive reinsurers into the same regulatory framework as traditional reinsurers through the accreditation process could impact some RRGs.”

Henry Witmer, a Senior Analyst at A. M. Best, cautioned that “uncertainty with respect to the future of the RRG format as it continues to be debated at the NAIC” may become a major issue in 2014. He said this may bring about “more restricted regulatory scrutiny of RRGs and possible limitations on the coverages offered.” As for industry performance, he said: “There are quite a few very strong and well-capitalized RRGs that serve a well-defined niche. These will continue to prosper. Others with a less sound capital base will struggle, at least in the near term.”

February 8, 2014

SANDY ELSASS REPORTS ON RRG INDUSTRY

You can watch his two-part interview now on www.WRIN.tv -- the video network that reaches more than 25,000 insurance industry leaders across the country. Just click this LINK to see Sandy in action.


 
December 13, 2013

PLAN NOW FOR 2014 CONFERENCE AT CHICAGO’S SOFITEL

The 2014 NRRA Conference will be held September 30 through October 2 at the luxurious Sofitel Hotel on Chicago’s Gold Coast in the heart of the City’s prime entertainment, dining and shopping district.

Steps from Chicago’s Magnificent Mile, close to the exciting shoreline of Lake Michigan, major museums and galleries, five-star restaurants and abundant nightlife, you can enjoy Chicago’s many attractions while staying at the convenient Sofitel and attending the Conference. With typically good weather, early October is a great time to explore Chicago.

“We’re moving the Conference to Chicago this year to create a central location with convenient access to members and guests from across the country,” said Sanford Elsass, NRRA Chairman. “A survey of attendees at the 2013 Conference reported that it was one of the best ever, and we’re already putting together a robust agenda with top speakers and panelists for next year,” said Rod Nofziger, Conference Chairman.

“From the 5,600-square-foot grand ballroom to eight smaller meeting and breakout rooms, the Sofitel provides a superior location for all our events,” said Joe Deems, NRRA Executive Director. A special feature next year will be convenient meeting rooms set aside exclusively for members, captive managers and service providers to get together with clients and industry contacts.

Registration information will soon be published on our website, www.riskretention.org. Please put the dates on your 2014 calendar now.

THREE NRRA BOARD MEMBERS NAMED TO THE “POWER 50” BY CAPTIVE REVIEW MAGAZINE

The naming of three board members to the Power 50 reflects the strong role NRRA plays in defending the industry, said Joe Deems, NRRA Executive Director, who also was named.

Members of the Power 50 were selected from 500 nominations made by captive industry leaders worldwide. According to the magazine, “the ultimate aim is to recognize the industry’s most significant professionals who are globally viewed as being proactive, influential, forward thinking, thought provoking, innovative and committed.” NRRA board members honored are:

Robert “Skip” Myers, Managing Partner, Morris Manning & Martin, and General Counsel, NRRA. Myers was cited for his “great influence in Washington” and as a leader in “defending the rights of RRG’s against the National Association of Insurance Commissioners.” Myers has written and spoken on various issues, and his legal opinion is one of the most sought after in the U.S. market.

Nancy Gray, Regional Managing Director, AON Global Insurance Managers. Gray was recognized as “highly respected in the industry, which reflects her influence on all matters of captive management” and for her active role in captive associations.

Sanford “Sandy” Elsass, Managing Director, Encore Partners, and Chairman of the NRRA Board. Elsass was recognized as the “voice of the insurance risk retention sector through his position at NRRA” and as a leader “in thwarting government efforts to encroach on the authority of RRGs.”

Executive Director Joe Deems was commended for his resilient leadership of “an esteemed association with a major influence on the Risk Retention Act” and for establishing “a strong relationship with domicile regulators all over the U.S.” He is known for defending RRGs against punitive state requirements.

RRGs REPORT FINANCIALLY STABLE RESULTS THROUGH SECOND QUARTER 2013

Risk Retention Groups collectively are financially stable with improved performance in key measures of capital adequacy and profitability through the second quarter of 2013, reported Douglas Powell, Senior Financial Analyst at Demotech, Inc., the financial analysis and rating firm.

“Over a five-year period from second quarter 2009 through second quarter 2013, RRGs collectively increased policyholders’ surplus 49.6 percent. This increase represents the addition of nearly $1.2 billion to policyholders’ surplus. During this same time period, liabilities increased only 6.9 percent, approximately $295 million. These reported results indicate that RRGs collectively are adequately capitalized and able to remain solvent if faced with adverse economic conditions or increased losses,” Powell wrote.

The RRG industry reported nearly $1.8 billion direct premium written through the second quarter, up 10.5 percent from 2012. The combined loss and expense ratio through second quarter 2013 was 90.3 percent compared to 92.4 percent for the same period in 2012. RRGs collectively reported net income of $113.4 million, an increase of $4.2 million over second quarter 2012.

RRG FORMATIONS DOWN, PREMIUM REVENUE UP IN THIRD QUARTER, ACCORDING TO THE RISK RETENTION REPORTER

In it’s Quarterly Journal of Risk Retention Group Statistics, the Risk Retention Reporter noted that, “the risk retention group marketplace is contracting in terms of the number of RRGs. At the end of 2012, after two quarters of strong formations, the RRG marketplace seemed poised to see a surge in numbers. Yet, with well fewer formations than retirements so far this year, the total number of RRGs has dropped to 256 from 261 at the end of last year. However, premium for 2013 is estimated at more than $2.8 billion, an increase of 7.5 percent.” With the continuing soft market, the Risk Retention Reporter predicted that, “until the market truly starts to harden, a significant rebound in RRG formations may be a couple of years away.”October 22, 2013

NRRA TAKES FIGHT TO PROTECT RRGs TO THE COURTS

Click here to watch NRRA members discuss efforts to achieve a consistent application of the federal Risk Retention Act, due to cases where they say state regulators have usurped aspects of the law on A.M. Best TV.

A.M. BEST TV COVERS NRRA CONFERENCE

NRRA leaders report on major issues facing RRGs at the recent conference in Washington, DC. Click here for the video coverage for interviews with General Counsel Skip Meyers, President-Elect Rod Nofziger, Litigation Committee Chairman Jon Harkavy, Executive Director Joe Deems and Board Member Mike Schroeder.



October 8, 2013

ROYCE TELLS NRRA HE PLANS HEARING TO INVESTIGATE NAIC


Washington, DC -- Congressman Ed Royce, a senior member of the House of Representatives Financial Services Committee, told NRRA at the Association’s conference last week that he will schedule a hearing to investigate the status of the National Association of Insurance Commissioners (NAIC) as a “de facto regulator” of state insurance departments through its accreditation process. Royce has long been a vocal critic of the NAIC for acting without authority in the dual capacity of trade association and regulator through its activity in standard setting and accreditation. Royce said NAIC “imposes its will on companies and states through its accreditation standards, while representing the U.S. on an international basis on rules it has no authority to enforce on a universal basis.” Royce noted that RRGs are protected, to some extent, by the federal Liability Risk Retention Act, but he encouraged NRRA to be vigilant in defending the industry.


RRGs, PGs, CAPTIVE MANAGERS, REGULATORS, SERVICE PROVIDERS DEBATE ISSUES AND SHARE INSIGHTS AT NRRA CONFERENCE


Issues ranging from non-domiciliary states’ attempts to reign in RRGs in violation of the Liability Risk Retention Act, to Cyber Security, to how the Affordable Care Act will impact the industry took center stage at last week’s NRRA annual conference in Washington, DC.  Regulators from Vermont, DC, South Carolina, Delaware and Montana -- recognized as among the leaders in management of RRGs -- held a Town Hall session in which they described their efforts in the NAIC to gain better understanding of issues affecting the risk retention sector.  Attendees were warned that the Affordable Care Act will have indirect impact on RRGs although it might appear that as writers of liability insurance they might not be affected.  Attendees also were strongly advised to adopt programs to protect against cyber attacks -- noting that any company that holds confidential or proprietary data regardless of size is at risk. Presentations on these and many other topics discussed at the conference are available to conference attendees on the NRRA mobile app. 


NRRA HONORS JON HARKAVY


Washington, DC -- Jon Harkavy, a leader in the alternative risk transfer insurance market and one of the architects of the Liability Risk Retention Act of 1986 (LRRA), received the National Risk Retention Association’s Karen Cutts Visionary Award at the Association’s 26th annual conference. The Cutts Award is given each year to an individual who has made an outstanding contribution to the risk retention and purchasing group sector of the insurance industry.


Harkavy is vice-president and general counsel of Risk Services LLC, a leading manager of captive insurance companies and risk retention groups. He is widely recognized as one of the most effective spokespersons for the alternative risk transfer sector of the insurance industry. He served as Director of Governmental Affairs and General Counsel of the Risk & Insurance Management Society (RIMS) from 1981 through 1989 where he represented insurance buyers in advocating passage of the LRRA. 


“Jon Harkavy is a leader in captive management and an outspoken defender of Risk Retention Groups. He has been a strong force in the growth of our industry from its infancy to more than 250 RRGs that today collectively write more than $2.5 billion,” said Sanford Elsass, Chairman of NRRA. Harkavy, a former NRRA Board member, was reelected to the Board at the Association’s conference. 


NRRA BOARD ELECTION


Sanford “Sandy” Elsass was elected to a third term as Chairman of the NRRA Board,  and Rod  Nofziger was reelected Vice Chairman and Chairman-Elect. 

John Harkavy and Mark Maxson were elected to serve as members of the Board. Elsass is President of Encore Partners LLC, a consulting firm active in the alternative risk transfer sector. Nofziger is Chief Operating Officer of OOIDA, the trade association that represents some 150,000 independent truckers in the United States and Canada. Harkavy is Vice President and General Counsel of Risk Services, one of the largest captive managers of risk retention groups. Maxson is Executive Vice President of JLT Re North America.  JLT is one of the world’s largest reinsurance broking and consulting firms.


VETERAN JOURNALIST JIM FORBES SAYS INSURANCE INDUSTRY MUST RELATE TO CONSUMERS ON A PERSONAL LEVEL 


The industry needs to tell a positive story of how insurance protects human consumers in ways they can relate to -- personal stories that involve people, not statistics -- keynote speaker and Emmy Award winning investigative journalistJim Forbes told attendees at the NRRA conference.  He stated that the industry is caught up in the media-influenced political debate over the Affordable Care Act, and as insurers RRGs face the same perception problems as traditional carriers .  Forbes called on NRRA and other industry organizations to cut through the clutter with positive stories about how insurance can and should serve consumers.


NRRA IN THE NEWS


National trade publications and video news networks provided in-depth coverage of the NRRA conference. Reporters and editors from A. M. Best News, World Risk and Insurance News (WRINtv) and Business Insurance reported on major sessions and interviewed NRRA leaders and speakers. 



SPECIAL THANKS TO CONFERENCE SPONSORS


Chairman Sandy Elsass, Executive Director Joe Deems and the NRRA Board gave a big vote of thanks to the many sponsors of the NRRA conference. “Without the support of our sponsors, the Conference would not have been possible. This is the only national meeting devoted exclusively to risk retention and purchasing groups. Our sponsors are key to bringing the industry together to address major issues affecting the business,” Deems said. All sponsors are featured on the NRRA website, www.riskretention.org and on the NRRA mobile app for handheld devices.


CHICAGO NEXT YEAR


NRRA’s 2014 conference will be held in Chicago next year -- dates in October and hotel to be announced soon. Check our website, www.riskretention.org, for the latest information and be sure to save the dates.


September 25, 2013

NRRA CHAIRMAN DISCUSSES ISSUES FACING RRGs ON WORLD RISK AND INSURANCE NEWS AS CONFERENCE APPROACHES

Click here for Part I and here for Part II.



September 18, 2013

NRRA FEATURED ON WORLD RISK AND INSURANCE NEWS 

World Risk and Insurance News, the leading online source of industry news, will feature a two-part series on issues that affect risk retention groups. The newscast will reach more than 15,000 insurance executives, brokers, regulators and industry leaders with comments by Sandy Elsass, chairman of the NRRA Board. Be sure to tune in to wrin.tv on your laptop or smart phone anytime Thursday, September 19, and Wednesday, September 25. The broadcast will position the upcoming NRRA Conference as the only gathering of RRG CEOs, regulators, captive managers and industry analysts devoted exclusively to the risk retention and risk purchasing group sectors. 

RECORD ATTENDANCE EXPECTED AT NRRA CONFERENCE -- DON’T MISS OUT ON THE INDUSTRY’S BEST NETWORKING OPPORTUNITY 

The NRRA Conference at the Ritz Carlton Pentagon City in Washington, DC, October 1 -3, is shaping up to be the biggest ever, but it’s not too late to sign up. The conference program covers all the major issues facing risk retention and purchasing groups in today’s challenging marketplace. After two and a half days of presentations and work sessions by experts, you’ll take home information important to the operation of your RRG or Purchasing Group, and you’ll have plenty of opportunities to talk with captive managers and leading suppliers of professional services to RRGs and PGs. Be sure to register online now and call the Ritz (703-415-5000) to reserve a room. The Ritz will advise you of other first class hotels nearby if no more rooms are available. 

RISK RETENTION GROUPS OUTPERFORM COMMERCIAL MARKET 

The insurance rating agency A. M. Best issued a report in August that risk retention groups outperform the commercial insurance market. “RRGs’ focused approach has resulted in aggregate operating performance consistently better than that of their peer group of commercial insurers,” the report concluded. “There are many reasons for the differences, including low retentions, prudent and active management and mitigation of losses and implementation of robust risk management practices among members.” The report was based on a study of 40 RRGs rated by A. M. Best. However, Steven Chirico, an author of the report, said the findings for Best-rated RRGs reflect the industry as a whole. The report, U.S. Captives Tightened Margins as Property Losses Spiked in 2012, is available at www.ambest.com


September 17, 2013

NRRA EXECUTIVE DIRECTOR, JOE DEEMS, SPEAKS WITH AM BEST TV

Mr. Deems discussed the challenges facing Risk Retention Groups, NRRA's recent activities and the difficulty of getting legislation passed in the current Congress. Click here to watch the interview!


September 11, 2013


NRRA's ROOM BLOCK HAS REACHED CAPACITY SO RESERVE YOUR ROOM NOW FOR THE NRRA CONFERENCE OCTOBER 1-3 IN WASHINGTON DC AT THE RITZ CARLTON PENTAGON CITY


NRRA Executive Director, Joe Deems, announced today that NRRA’s block of rooms at the conference hotel has now been filled.   Although we are still three weeks ahead of the conference, we have more rooms reserved than we used at last year's conference.  He emphasized, however, that there are still rooms at the hotel, so if you want to stay at the Ritz where all the action is, the time to reserve your room is now-today!  The Executive Office, he added, is negotiating with the hotel to continue receiving favorable rates for attendees, so if you cannot register with the Ritz "online," call the hotel at 703-415-5000 and request a room at the special rate for NRRA attendees.  If unavailable, reserve a room at whatever rate you can get and advise the Executive Office, which will attempt to secure a lower rate, on a first come, first serve basis, while rooms last. There is no guarantee on this because there is another meeting group in the hotel with us competing for the rooms.  Once out of rooms, the Ritz will advise you of other fine hotels nearby if rooms become unavailable.  


CONFERENCE REGISTRATION DEADLINE EXTENDED YOU CAN STILL REGISTER 


In light of the early sellout of rooms, the Executive Director also  announced that NRRA has extended the deadline for early conference registration to September 20, 2013 to take advantage of the early-bird rate.  It’s easy -- just click into our website www.riskretention.org . On the left of the home page you’ll find conference information including registration forms and a brochure with the conference program.  If the database will not accept your registration at the early-bird rate, just send it in to info@riskretention.org and we will process it for you.  


DO YOU DO BUSINESS WITH RRGs, RPGs AND CAPTIVE MANAGERS?


It’s not too late to become a conference sponsor. The NRRA conference is the only national meeting devoted exclusively to risk retention and risk purchasing groups. As a sponsor, you’ll have a prime networking opportunity to visit with clients and reach out to prospects for your services. Sponsorship levels and benefits are spelled out online atwww.riskretention.org  along with a convenient sponsorship agreement.


NRRA CONFERENCE TO FOCUS ON GROWTH PROSPECTS FOR RISK RETENTION GROUPS


Leaders in the RRG and RPG sectors of the insurance industry will focus on future growth prospects at the National Risk Retention Association conference October1-3 in Washington, DC. 


The 257 risk retention groups in business today collectively generate more than $2.5 billion premium. RRGs were authorized under the Liability Risk Retention Act of 1986 to write liability insurance in all 50 states when licensed in a single state.  Equally dramatic, purchasing groups (RPGs), have grown to over 901 in number this year representing similar premium.


“We expect the number of RRGs and Purchasing Groups will increase gradually over the next few years as the demand for liability insurance grows with the improving economy,” said Joe Deems, NRRA Executive Director. NRRA has been a vigorous defender of RRGs’ authority to operate with only limited regulation by states other than the state in which they are licensed. The conference will provide a platform for dialogue between RRGs, PGs and regulators on a host of topics that affect growth prospects for the industry.



ROYCE TO SPEAK ON REGULATION


Congressman Edward Royce, a vocal critic of the National Association of Insurance Commissioners, will be a major speaker on Thursday, Oct. 3, at the Conference. The California Republican is a senior member of the House of Representatives Financial Services Committee and chairman of the House Foreign Relations Committee. In a letter to the President of the National Association of Insurance Commissioners last year, Rep. Royce took issue with the NAIC’s questionable dual role as a standard-setting body for state insurance regulators and its admitted inconsistent status as a private association of insurance commissioners.


MAJOR SESSIONS ON CYBER SECURITY AND AFFORDABLE CARE ACT


The conference also will feature major sessions on what RRGs must do to prepare for implementation of the Affordable Care Act in 2014 and how to deal with the growing threat of cyber attacks. “The impact of the Affordable Care Act on the liability insurance market is a significant concern for our industry because more than half the RRGs in business today are in healthcare; and cyber security has become a problem for companies large and small,” said Rod Nofziger, NRRA conference chairman.


OTHER TOPICS VITAL TO RRG/PG OPERATIONS ON THE AGENDA


Many additional subjects critical to RRG growth are on the program including contractual liability/stop loss; how to address rising premiums for Directors & Officers and Errors & Omissions insurance; legislative developments; reinsurance planning; and Medicare/Medicaid RAC audits, among others.


SPECIAL CONFERENCE FEATURE -- AWARD WINNING BROADCAST JOURNALIST JIM FORBES ON TODAY’S MEDIA AND YOUR BUSINESS DECISIONS


We live in a media culture and no one is better qualified than Jim Forbes to explain the dramatic impact of today’s 24-hour news cycle on our business decisions and everyday lives. You won’t want to miss his insightful, entertaining presentation at the NRRA conference. For more than three decades Forbes has walked in many shoes from long-time investigative producer/reporter/writer, to host of the pop culture phenomenon Behind the Music. He’s a multiple Emmy and Golden Mic award-winner. During the past 15 years, he has narrated more than 500 hours of documentary programming for more than a dozen different networks.


August 21, 2013

CONGRESSMAN ROYCE - VOCAL CRITIC OF NAIC - TO ADDRESS NRRA CONFERENCE

Washington, DC -- Representative Edward Royce will be a featured speaker on Thursday during the annual conference of the National Risk Retention Association, October 1-3, in Washington, DC.  The California Republican is a senior member of the House Financial Services Committee and holds a number of other key committee assignments, including chairman of the House Committee on Foreign Affairs. 

In a letter to the President of the National Association of Insurance Commissioners last year, Rep. Royce took issue with the NAIC’s questionable dual role as a standard-setting body for state insurance regulators and its admitted inconsistent status as a private association of insurance commissioners. “We’re pleased to have Ed Royce on our program. He is widely respected in the industry for his deep knowledge of insurance and his views on regulatory issues affecting risk retention groups,” said Rod Nofziger, NRRA Conference Chairman.

Other major conference topics will be what RRGs must do to prepare for full implementation of the Affordable Care Act (ACA) in 2014 and how to deal with the growing threat of cyber attacks. “The impact of ACA on the liability insurance market is a major concern for our industry because more than half the 250 RRGs operating today are in healthcare; and cyber security has become a priority for companies large and small,” Nofziger said.

A host of other subjects critical to RRG operations are on the program including contractual liability/stop loss; how to address rising premiums for Directors & Officers and Errors & Omissions insurance; legislative developments; outlook for industry growth; reinsurance planning; Medicare/Medicaid RAC audits; and how to deal with the trial bar. The conference will conclude with a Town Hall meeting with insurance regulators.

The Conference will be held at the Ritz Carlton Pentagon City. Attendees can register online at our website: www.riskretention.org


REGISTER NOW AND CONTACT THE RITZ CARLTON --  

NRRA HAS A LIMITED BLOCK OF ROOMS AND THEY’RE GOING FAST

Executive Director, Joe Deems, reports that there is another meeting group in our conference hotel at the same time as the NRRA annual conference is taking place, which will drive up the competition for available rooms. If you have not registered for the conference and at the hotel, he urges you to do so NOW.  Don’t worry, he added, there are a number of first class hotels nearby if you’re still firming up your plans. It’s easy to register online at www.riskretention.org.

PROVOST EXPECTS RISK-FOCUSED EXAM FEES TO COME DOWN

In a meeting with the insurance trade media at the VCIA Conference last week, David Provost,  Deputy Commissioner of the Captive Insurance Division of Vermont, said he expects the cost of risk-focused examinations to come down for companies domiciled in Vermont. He said the Vermont department is committed to making the examination process more cost effective and timely. 

SKIP MYERS HONORED AT VCIA

Robert “Skip” Myers, NRRA General Counsel and long-time Board member, was honored at the VCIA conference in Burlington, Vermont last week with the Industry Service Award in recognition of his outstanding contributions to the advancement of captive insurance and risk retention groups. VCIA President Richard Smith presented the award at the opening general session. 

NRRA ON THE FRONT LINES DEFENDING THE INDUSTRY

Over the last two years or so, NRRA has defended risk retention and purchasing groups in a wide variety of areas. Here are a few of the association’s actions advocating for the industry:

  • Helped win a major decision in which the federal court upheld the preemption provisions of the Liability Risk Retention Act allowing Association for Non-Profits Insurance, a risk retention group (ANI), to continue operating in Nevada.

  • Filed Amicus Briefs challenging both regulator misconduct and state laws that violate the LRRA.

  • Persuaded Governor Christie of New Jersey to veto insurance legislation adverse to our members.

  • Reported years of states’ regulatory violations to the U.S. Government Accountability Office.

  • Challenged the NAIC on its regulatory initiatives that discriminate against our industry.

  • Assisted in defeating New Mexico legislation banning RRGs from writing medical malpractice insurance in the state.

  • Created a positive program to promote purchasing group advocacy.


PLAN NOW TO ATTEND THE NRRA CONFERENCE OCTOBER 1-3 IN WASHINGTON, D.C.


August 5, 2013

NRRA OCTOBER 1-3 CONFERENCE TO FOCUS ON AFFORDABLE CARE ACT AND CYBER THREAT

NRRA’s annual conference October 1-3 in Washington, DC at the Ritz Carlton-Pentagon City will feature sessions on what RRGs must do to prepare for full implementation of the Affordable Care Act in 2014 and how to deal with the growing threat of cyber attacks.

“More than half the 250 risk retention groups operating today are in healthcare, so we‘ll devote major attention at the conference to the Affordable Care Act and its challenges for our industry,” said Sanford Elsass, NRRA Chairman. “With cyber security looming as an issue for companies of all sizes, the conference program will include a major session on how to guard against cyber attacks and what to do in the case of a breach,” he added.

A host of other topics critical to RRG operations are on the program including NRRA's Amicus program; contractual liability/stop loss; how to address rising premiums for Directors & Officers and Errors & Omissions insurance; regulatory  developments; outlook for industry growth; reinsurance planning; Medicare/Medicaid RAC audits; and risk management versus the trial bar. The conference will conclude with a Town Hall meeting with insurance regulators.

It’s not too early to register, especially if you want to stay in the Ritz Carlton. NRRA has a limited block of rooms but plenty of space is available at nearby hotels. See the NRRA homepage for more information.

AMICUS BRIEFS -- PRIORITY FOR NRRA

Despite a string of federal court decisions upholding the preemption provisions of the Liability Risk Retention Act, a number of the usual states continue to challenge the legal authority of RRGs to do business in their jurisdictions. Recently, NRRA has filed amicus briefs to defend RRGs in state courts against adverse insurance laws that we contend are preempted by the LRRA.  Previously, NRRA focused on adverse decisions by regulatory entities. “The Association stands ready to file amicus briefs in support of member companies. The amicus brief is an important tool in our arsenal,” said Joseph Deems, NRRA Executive Director. “We’re prepared to provide the Association’s legal experience and expertise in using this tool to support companies under attack,” Deems asserted.

RISK PURCHASING GROUP CHALLENGES OKLAHOMA INSURANCE DEPARTMENT DECISION THAT COLLATERAL PROTECTION COVERAGE IS NOT LIABILITY INSURANCE

In September 2012 Creditors Insurance Purchasing Group (CIPG), an Oklahoma domiciled federal purchasing group, filed suit in the United States District Court for the Western District of Oklahoma against the Oklahoma Insurance Department and its Commissioner, John Doak. The suit seeks a declaratory judgment that collateral protection insurance is a permissible liability insurance product under the Liability Risk Retention Act of 1986.  

CIPG contends that collateral protection insurance which protects a creditor’s interest only against loss or damage to an item of collateral is a permissible form of contractual liability under the Act.  The OID and Commissioner Doak contend it is not “legal liability” and therefore cannot be placed by an RPG, in this case, with a federal risk retention group that coincidentally had provided the coverage for several years. Two months after the lawsuit was filed the OID oppressively refused to renew CIPG’s registration under Section 3903 (d) & (e) of the LRRA because it alleged CIPG was not a member of the risk retention group that it placed its business with.  The federal judge granted the Commissioner’s motion to dismiss without prejudice on the liability issue and CIPG amended its complaint and re-filed.  The Commissioner filed a second motion to dismiss and CIPG responded. The judge has not ruled.  This case may also be reviewed at the Annual Conference.

NRRA DEFENDS INDUSTRY AGAINST STATE DIRECT ACTION AND ARBITRATION STATUTES

After winning landmark decisions in the federal courts, NRRA is moving aggressively to defend the industry against state laws that interfere with risk retention groups doing business in their states. Two recent cases focused on state “direct action" insurance statutes, which require that liability policies include a provision permitting a plaintiff who recovers judgment against the insured to maintain a direct action against the insurer if the insured does not satisfy the judgment within a specified time.

In New York, Allied Professionals Insurance Company Risk Retention Group (APIC) won a judgment in the federal district court (2ndCircuit) that the state’s direct action statute is preempted by the Liability Risk Retention Act of 1986. The action was brought against APIC by Renata Wadsworth who sought to recover a $101,175 state court judgment against a chiropractor insured by APIC for unwanted sexual touching.  Sexual misconduct is excluded under APIC’s policy, and after denying coverage the Company asserted that the direct action statute is preempted by the federal Risk Retention Act. NRRA provided a supporting declaration from Executive Director Joseph Deems in the case.


In Louisiana, NRRA also challenged a lawsuit brought against APIC seeking to avoid  APIC's arbitration clause. In an Amicus Brief to the 19th Judicial District Court in East Baton Rouge, NRRA sought enforcement of APIC's arbitration provisions on a claim against APIC under the Louisiana law. “Imposing Louisiana’s statutes against APIC would essentially nullify the arbitration provision contained in APIC’s policy. As such, it would improperly regulate the operations of APIC in violation of the LRRA. In turn, the harmful impact on APIC, as well as the 88 other RRGs doing business in Louisiana, would undermine the entire purpose and intent of the LRRA by threatening the existence of affordable liability insurance coverage,” NRRA stated in the Amicus Brief.


ARBITRATION ISSUE PENDING IN NEW JERSEY

The New Jersey case stems from a state trial court order that required venue of the arbitration of a claim dispute in New Jersey contrary to the venue provisions of the arbitration clause in the policy. NRRA sought to file an Amicus Brief in support of APIC’s appeal to the New Jersey Superior Court-Appellate Division. The Appellate Court remanded the case to the lower court where it is pending further review. 

“Requiring arbitration in states other than those specified in a policy by an RRG violates the preemptive portions of the federal Liability Risk Retention Act, and it would drive up claims settlement costs resulting in less affordable liability insurance for RRG members,” said Joseph Deems, NRRA Executive Director.

In an affidavit accompanying the motion to file an Amicus, NRRA asserted that if RRGs chartered in other states were to be subject to the New Jersey state laws, such as the requirement to hold arbitrations in the state, many RRGs that operate nationally would no longer write policies there -- they simply could not afford to restructure their business plans in order to bear the risk and expense of arbitration in New Jersey. 

NRRA GENERAL COUNSEL ROBERT “SKIP” MYERS REPORTS ON NAIC

The long march toward regulatory consistency continues at the NAIC, where NRRA is represented at each national meeting and at each of the many conference calls among regulators.   At the last NAIC meeting in Houston in April, two regulator groups worked directly on RRG issues and several others worked on matters of tangential interest.   

The Risk Retention Group (E) Task Force struggled with the translation of GAAP accounting into Statutory accounting required in a footnote to the Annual Statement.   At issue was the additional cost of bowing to the requirement of auditors that both Statutory and GAAP books be maintained by the RRG.  After considerable discussion, the decision was made that the footnote need not be audited.  While this is clearly the common sense decision, it still has to be approved by a higher NAIC committee.

The Risk Retention (C) Working Group put the final touches on its revision of the Risk Retention and Purchasing Group Handbook.  NRRA has been involved in this process since its inception and has attempted to protect the LRRA from misconstruction by state regulators who may wish to impose obligations on RRGs not contemplated by the federal law. RRG registration requirements were the focus of this meeting.  The results were mixed in our attempts to provide language for the Handbook that is consistent with our understanding of the federal law.   The Handbook, of course, is not law and would be preempted by a court should it be inaccurate in its interpretation.

The regulatory scrutiny of RRGs will continue at the next NAIC meeting, which is set for August 24 - 27 in Indianapolis.   

PLAN NOW TO ATTEND THE NRRA ANNUAL CONFERENCE IN WASHINGTON, DC TO LEARN MORE ABOUT ALL NRRA IS DOING ON BEHALF OF THE INDUSTRY --- 

YOU CAN REGISTER NOW AT WWW.NRRA-USA.ORG




June 19, 2013

RISK RETENTION GROUP DIRECTORY & GUIDE AND MARKET ANALYSIS & FINANCIAL STABILITY SUPPLEMENT NOW AVAILABLE

The 24th annual edition of the Risk Retention Group Directory & Guide is now available. Often called "the bible" of the risk retention industry, the Directory & Guide offers a wealth of information that is key to improving and expanding your business. Available in either print or CD, it is the most comprehensive and up-to-date information source for risk retention groups and this dynamic industry.

New this Year! The Directory & Guide now includes the Market Analysis and Financial Stability Supplement--a stand-alone book that offers in-depth analysis and benchmarking of RRG financial data and the RRG marketplace. This publication is available through the Risk Retention Reporter. It can be ordered now at www.rrr.com/order


May 1, 2013

RISK RETENTION MARKET QUIET IN FIRST QUARTER

The risk retention market is on a plateau with only two new RRGs formed and six retired in this year's first quarter, according to the Risk Retention Reporter's Quarterly Journal. Since 2009, new formations have been running between three and four while the number of RRGs retiring averaged seven. Some insurance industry observers see signs that the general insurance market is beginning to harden, but so far there has been little effect on RRGs. "Risk retention groups are slow to form at this stage and without a drastic change in the traditional market or a sudden change in the regulatory or legislative environment, this trend is likely to last for some time," Karrie Hyatt, editor of the Journal, predicted.

April 19, 2013

NRRA VICE-CHAIR NOFZIGER ELECTED CHIEF OPERATING OFFICER OF OOIDA

In a press release issued by the Owner Operator Independent Drivers Association (OOIDA) on April 17, it was announced that NRRA Vice-Chairman, Rod Nofziger, has been elected by the OOIDA Board of Directors to the position of Chief Operating Officer of the Association.

Previously, Nofziger worked out of OOIDA's D.C. office where he served as the Director of Government Affairs. In that role, he led efforts to advocate for the interests of the Association's membership on Capitol Hill and with federal agencies

Click here for the full press release.



April 12, 2013

NINTH CIRCUIT COURT RULES IN FAVOR OF RISK RETENTION GROUPS IN NEVADA CASE -- A VICTORY FOR THE INDUSTRY

San Francisco, CA -- The Ninth Circuit Court of Appeals this week affirmed a District Court ruling that under federal law the State of Nevada cannot deny a risk retention group the right to do business in the State. Joseph Deems, Executive Director of the National Risk Retention Association, hailed the decision as “a victory for risk retention groups.”

“As in other cases where States have attempted to impose requirements on RRGs that violate federal law exempting them from most regulation outside their home State, the Ninth Circuit issued an unqualified opinion upholding the preemption provisions of the Liability Risk Retention Act of 1986 (LRRA),” Deems said.

In 2010, the Alliance of Non-Profits for Insurance Risk Retention Group (ANI) was ordered by the Nevada Commissioner of Insurance to cease writing auto liability insurance in the State because it was not an “authorized insurer” under State law. ANI won a summary judgment in the District court that the LRRA preempts state regulation over risk retention groups. 

The three-judge Circuit Court affirmed the lower court decision, stating that, “The LRRA broadly preempts any State law, rule, regulation or order to the extent that such law, rule, regulation or order would … make unlawful, or regulate, directly or indirectly the operation of a risk retention group.”

At the same time, the Circuit Court denied award of Attorneys’ fees to ANI on grounds that the LRRA’s “preemption provision did not unambiguously confer a right to be free from state law” under the U.S. Constitution. 

In his statement, Deems said: “While NRRA, and no doubt others, are disappointed with the court's decision to deny attorneys’ fees, it is important to note that attorneys’ fees have been granted in the other cases, including Greenfield v. National Warranty, an earlier decision by this very court.”  

“The inability to recover attorneys’ fees is no deterrent to larger companies and associations like NRRA. We will continue to rely upon the substantive law of this very favorable decision to support our right to resist unlawful overregulation by the States.  It is just a matter of time before we will be able to persuade the lawmakers and the courts that the individual owners of RRGs, like all other citizens, are entitled to be free from discriminatory actions.” 

Media Contact: Mechlin Moore, Director of Communications, National Risk Retention Association (Cell: 239-777-1595;  mooremechlin@gmail.com)


April 1, 2013

RISK RETENTION REPORTER AND DEMOTECH PARTNER FOR IN-DEPTH ANALYSIS OF RISK RETENTION GROUP MARKETPLACE

Pasadena, CA -- The Risk Retention Reporter and Demotech, Inc. have joined together to create an in-depth analysis of the Risk Retention Group marketplace to be published in conjunction with the Risk Retention Reporter's annual book, the Risk Retention Group Directory and Guide, available in May.

Click here for the full press release.


February 14, 2013

AMICUS UPDATE
NINTH CIRCUIT HEARS ORAL ARGUMENT ON APPEAL IN ANI CASE -- DECISION WEEKS AWAY

Oral argument on an appeal from the federal District Court decision to allow the Alliance of Nonprofits for Insurance RRG (ANI) to continue operating in Nevada, despite the State’s effort to shut it down, was heard February 11 before a panel of justices at the Ninth Circuit Court of Appeals. A decision by the Court is not expected for weeks. 

Attorneys for the State of Nevada sought a reversal of the District Court opinion, claiming that its Cease and Desist Order to halt ANI operations was legal under state law. ANI counsel argued that the order to cease operations discriminated against the RRG in violation of the Liability Risk Retention Act of 1986 (LRRA) and called on the higher court to affirm the District Court decision that upheld ANI’s right to do business in the state. 

NRRA led a coalition of supporters of ANI with an Amicus Brief filed in December 2011 asking the Circuit Court to uphold the lower court decision. ANI has been issuing affordable, commercial auto liability policies to non-profit organizations in Nevada since 2001. The Company is rated “A-Excellent” by A.M. Best. In September, 2010, the Nevada Division of Insurance ordered ANI to stop writing insurance in the State because it was not an “authorized insurer” under State law. The lower court affirmed ANI’s right to do business and ordered the State to recognize RRGs as “authorized insurers” under the authority granted by the federal law. 

“Simply stated, the District Court correctly found that the LRRA preempts Nevada laws that bar RRGs not chartered in Nevada from writing first-dollar liability auto insurance in the state. The decision should be affirmed,” wrote Robert H. Myers Jr., NRRA General Counsel, who filed the brief on behalf of the four organizations. NRRA Executive director, Joseph Deems, who attended the hearing on February 11th, observed that the arguments seemed to focus on the correct legal issues and precedent and was optimistic for an appropriate decision by the court.


APPEAL OF RIGHT TO REQUIRE ARBITRATION CASE REMANDED TO LOWER COURT IN NEW JERSEY

The New Jersey Superior Court-Appellate Division has now remanded to the lower court for further determination an appeal by Allied Professionals Insurance Company (APIC) to reverse the trial court order that would require APIC to arbitrate a claim-coverage dispute in New Jersey, contrary to the provisions of the policy. The National Risk Retention Association (NRRA) had sought leave to file an Amicus Brief in support of the appeal. 

“Requiring arbitration in states other than those specified in a policy by an RRG violates the exemption provisions of the federal Liability Risk Retention Act (LRRA), and it would drive up claims settlement costs resulting in less affordable liability coverage for RRG members,” said Joseph Deems, NRRA Executive Director. 

In its brief, NRRA asserted that the trial court's order not only disregarded the terms of the policy that arbitrations be conducted in California where APIC has its administrative headquarters, but more importantly, was also in direct violation of the LRRA. 

The appeal stems from a malpractice claim against Joanna Jodar and her employer, Integral Acupuncture, following which Jodar had failed to disclose the claim in an application for coverage. After the insured brought the action in New Jersey, APIC moved for arbitration, which was granted but the trial court ordered that the arbitration take place in New Jersey. APIC appealed the venue order. In its brief, NRRA told the court that, “New Jersey state law cannot be used to force APIC to arbitrate this matter in New Jersey because the state law is federally preempted by the LRRA.” 

In an affidavit accompanying NRRA's Amicus Brief, declined by the Court because leave had only been sought at the reply stage, Deems asserted that if RRGs chartered in other states were to be subject to New Jersey state laws, such as the requirement to hold arbitrations in the state, many RRGs that operate nationally would no longer write policies there. “They simply could not afford to restructure their business plans in order to bear the risk and expense of arbitration in New Jersey.”

February 11, 2013

ELSASS WRITES ON CAPITAL NEEDS FOR SOME RRGs

In an opinion piece published by Demotech, NRRA Chairman Sandy Elsass wrote that lack of capital is a major obstacle to growth for many risk retention groups. "In my opinion, the soft market is not the critical reason for the slowdown in RRG growth. The real culprit is lack of capital to support expansion."

With an estimated 30 million presently uninsured persons eligible for cover under the Affordable Care Act in 2014, the demand for professional liability insurance will grow sharply. Risk retention groups are ideally suited to serve this market," Elsass noted. He proposed that entrepreneurial investors and hedge funds take a look at risk retention groups. Bank financing with some profit participation has been used in some cases -- especially banks that own insurance brokers. Elsass also recommended reviving a proposal made at a NRRA conference three years ago that reinsurers create a pool of capital to grow RRGs. "As proposed, the pool would be a win-win for investors. The reinsurers would generate an attractive return, and they would gain access to more reinsurance business from growing RRGs," Elsass wrote.

Click here for the full story.


LONDON MARKET REINSURERS LIKE RRGs, SAYS NRRA DIRECTOR BARRETT

Ken Barrett, Managing Director of London broker Besso Re and a member of the NRRA Board, gave a strong endorsement of risk retention groups in an interview with Douglas Powell, Demotech analyst. In the rating agency's latest online quarterly journal, Barrett had this to say: "The markets we use have a preference for dealing with RRGs over the larger property/casualty companies." He gave four reasons why London market reinsurers like RRGs -- policy-holder owned; tend to be mono-line writers; usually don't operate in all states; RRGs need reinsurance and that makes for a much preferred client base.

Click here for the full interview.


January 24, 2013


DEMOTECH REPORTS RRG FINANCIALS STABLE AND GROWING THROUGH THIRD QUARTER 2012

RRGs collectively reported $185.2 million net income and an underwriting gain of nearly $43.9 million for the first nine months of 2012, according to Demotech, the financial analysis and rating firm. The RRG sector has reported underwriting gains each year since 2004, and will maintain this strong track record in 2012. The industry combined loss and expense ratio improved from 92.9 percent in the same period of 2011 to 90.5 percent in the third quarter of 2012.

Other financial measures also underscored the financial stability of the RRG industry. Assets and surplus increased faster than liabilities. Surplus, the industry's capital base, grew 73.4 percent since third quarter 2008 while liabilities increased only 10.7 percent. Liquidity -- liabilities to cash and invested assets -- was approximately 68.4 percent, an improvement over third quarter 2011's 74.6 percent. Leverage -- liabilities to surplus -- in third quarter 2012 was 132.4 percent compared to 155.2 percent in 2011.

January 16, 2013 

COMMITTEE CHAIR SAYS NON-ADMITTED AND REINSURANCE REFORM ACT NEVER INTENDED TO APPLY TO THE CAPTIVE INSURANCE INDUSTRY

The National Risk Retention Association (NRRA) commended the announcement last week by Rep. Judy Biggert reaffirming that the Non-Admitted and Reinsurance Reform Act was never intended to apply to captive insurance.

"While the Act does not apply to risk retention groups because they were specifically excluded in the legislation, we're pleased that Rep. Biggert has made it clear that Congress did not intend it to apply to captives," said Joe Deems, Executive Director of NRRA.

"NRRA applauds the Vermont Captive Insurance Association and others in their efforts to secure this clarification. Clarifying language in complex federal legislation after its passage is no easy task and requires significant planning and coordination between coalition partners. Serious effort needs to be expended in advance by our industry to ensure that drafters of legislation understand technical distinctions between certain types of entities to avoid subsequent abuse by some state regulators," he added.

Rep. Biggert issued her clarification of the drafters' intent in response to regulators in some states who asserted that the Act's surplus lines tax provisions applied to captives. In her letter to the new Chairman and Ranking Member of the Committee, Rep. Biggert wrote, "As a supporter of the Non-Admitted and Reinsurance Reform Act and an advocate for its inclusion and passage as part of Dodd-Frank, I can tell you unequivocally that the Act was never intended to apply to the captive insurance industry."

NRRA is the professional association that represents risk retention and risk purchasing groups. There are more than 250 risk retention groups and over 800 risk purchasing groups that write liability insurance under the Liability Risk Retention Act of 1986 exempt from most state regulation outside the state in which the companies are licensed.

January 12, 2013

GAC MEMBERS LEAD WEBINAR ON CRITICAL ISSUES FACING RRGs

Members of NRRA's Government Affairs Committee will lead webinars sponsored by the International Center for Captive Insurance Education (ICCIE) online January 24 and 31 repeated February 7 and 14. Jon Harkavy, an authority on regulatory issues affecting RRGs; Stephanie Mapes, leader of the Captive Insurance Team at the Vermont law firm, Paul Frank + Collins; and Robert "Skip" Myers.

NRRA General Counsel, compose the faculty for this elective course.

"The instructors will explore the ways in which non-domiciliary states are abusing risk retention groups and clearly exceeding their limited empowerment under the Liability Risk Retention Act and RRG responses to non-domiciliary state overreaching," ICCIE announced.

"We recommend this webinar to RRG board members, staff and captive managers," said
Joe Deems, NRRA Executive Director. "In just an hour and fifteen minutes you'll be brought up to date on issues important to your business and have an opportunity to interact with some of the most knowledgeable people in our field," he added.

To register, contact Chelsea Hunter, Director of Administration, ICCIE, toll free at 1-866-60-ICCIE or online at http://www.iccie.org/course-catalog/electives/RRG.shtml

January 11, 2013

GOVERNMENT AFFAIRS COMMITTEE REPORT

Your Government Affairs Committee watchdogs stay alert to legal and regulatory challenges to RPG and RRG operating authority. Our new Amicus Update will keep you posted on actions taken by NRRA to defend our industry. Please contact me or a member of our Board to advise of any threats to RRGs or RPGs in your area. 

Joe Deems
Executive Director and Chair, Government Affairs Committee

AMICUS UPDATE
NRRA DEFENDS RRG's RIGHT TO REQUIRE ARBITRATION

The National Risk Retention Association has filed amicus briefs in two cases that threaten the right of Risk Retention Groups to require arbitration under the terms specified in the policy.

"Requiring arbitration in states other than those specified in a policy by an RRG violates the exemption provisions of the federal Liability Risk Retention Act (LRRA), and it would drive up claims settlement costs resulting in less affordable liability insurance for RRG members," said Joseph Deems, NRRA Executive Director.

In New Jersey, NRRA has recently sought leave to file its Amicus Brief in support of an appeal to the New Jersey Superior Court-Appellate Division by Allied Professional Insurance Company, A Risk Retention Group (APIC), to reverse a trial court order which required APIC to arbitrate a claim-coverage dispute in New Jersey, contrary to the provisions of the policy. NRRA asserts that the trial court's order not only disregards the terms of the policy that arbitrations be conducted in California where APIC has its administrative headquarters, but more importantly, it is also in direct violation of the LRRA.

The appeal stems from a malpractice claim against Joanna Jodar and her employer, Integral Acupuncture, following which Jodar had failed to disclose the claim in an application for coverage. After the insured brought the action in New Jersey, APIC moved for arbitration, which was granted but the trial court ordered that the arbitration take place in New Jersey. APIC appealed the venue order. In its briefing, NRRA told the court that, "New Jersey state law cannot be used to force APIC to arbitrate this matter in New Jersey because the state law is federally preempted by the LRRA."

In an affidavit accompanying NRRA's Amicus Brief, Deems asserted that if RRGs chartered in other states were to be subject to New Jersey state laws, such as the requirement to hold arbitrations in the state, many RRGs that operate nationally would no longer write policies there. "They simply could not afford to restructure their business plans in order to bear the risk and expense of arbitration in New Jersey."

In another amicus brief filed recently in Louisiana state court, NRRA is challenging a lawsuit brought against APIC under the state's "direct action" insurance statute. In its amicus brief addressed to the 19th Judicial District Court in East Baton Rouge, NRRA is supporting APIC's objection to being directly sued in that court, as well as its concurrent demand that APIC be allowed to arbitrate the case pursuant to the terms of its policy.

In that case, Ronald and Angela Courville sought damages under the Lousiana statute for an injury suffered by Ronald Courville in a cervical adjustment performed by Dr. Thomas Rathmann, a chiropractor insured by APIC.

"Imposing Louisiana's direct action statute against APIC essentially nullifies the arbitration provision contained in APIC's policy." Such an action, NRRA and APIC contend, constitutes an improper effort to regulate the operations (i.e., the business of insurance) of APIC in violation of the LRRA. They go on to say that the potential economic harm will not only affect APIC, but also prospectively the 88 other RRGs doing business in Louisiana, and would undermine the entire purpose and intent of the LRRA by threatening the existence of affordable liability insurance coverage."

SLOW BUT STEADY GROWTH FOR RRG/RPG SECTOR IN 2012

The RRG market continued to recover in 2012 from its big decline in 2009 when the recession took its toll. In 2012, the Risk Retention Reporter noted that 18 RRGs were formed and 13 closed. Healthcare represented the biggest increase with 11 new RRGs. However, nine healthcare RRGs were retired during the year, leaving a net gain of only two. "Healthcare formations and retirements will likely remain volatile in the next two or three years as the Affordable Care Act is implemented throughout the United States," the journal commented.

The Risk Purchasing Group market sustained steady growth in 2012 with 35 formations and only five closings. Overall, the RPG market grew 3.4 precent in 2012 -- similar to its average growth rate of 3.7 precent over the last five years. As with RRGs, the biggest gain was in healthcare, with property development close behind.

December 1, 2012

RRG INDUSTRY YEAR-END OUTLOOK POSITIVE

Five new Risk Retention Groups were formed in the third quarter and more are in the pipeline to be announced by year-end. Premium volume is forecast to exceed the $2,527,700 recorded in 2012, and the number of RRG policyholders is rising sharply. “The outlook for the fourth quarter is very positive. As many insurance forecasters are claiming a turn in the market is either here already or close at hand, indicators for the RRG sector also show that the market place is primed to see some serious growth in the next few years,” the Risk Retention Reporter predicted.

NEW STUDY SHOWS RRGs COST LESS TO OPERATE THAN TRADITIONAL INSURERS IN THE SAME LINES OF BUSINESS

When compared to traditional insurers with multi-state operations, Risk Retention Groups are more cost-effective, according to a new study conducted by J. Tyler Leverty, Associate Professor of Finance at the University of Iowa. “The costs associated with multi-state regulation are significantly higher than those for single-entity regulation,” Leverty reported. According to the study, “the average multi-state, standard insurer pays $187,323 in licensing fees, while the average multi-state RRG pays $44,237.” Bottom line, the study found that RRGs cost less to operate than traditional insurers, which results in savings to insurance consumers. Leverty’s study, The Cost of Duplicative Regulation: Evidence from Risk Retention Groups, was published in The Journal of Risk and Insurance. 

WHAT DOES THE FUTURE HOLD FOR PURCHASING GROUPS?

Three industry leaders predict slow but steady growth and a generally positive outlook for the Purchasing Group marketplace over the next few years. Look for their comments in the December issue of Risk Retention Reporter.  Daniel O’Leary, Partner in the firm of Mandell Menkes LLC; Michael Schroeder, a Director of NRRA and Chairman of three Purchasing Groups in the healthcare field; and Diane Sheakley, Principal, Captive Insurance Services, agreed that economies of scale, tailored coverage and lower rates for associations and affinity groups, along with stable, available coverage will prove the need for PGs regardless of market conditions.


October 18, 2012

NRRA EXECUTIVE DIRECTOR JOE DEEMS REVIEWS NRRA'S 25th ANNIVERSARY CONFERENCE

Washington, DC -- In an interview with World Risk and Insurance News, NRRA Executive Director Joe Deems discusses the FIO review of reinsurance, stop loss and the NAIC, other regulatory/legislative issues and the upcoming presidential election. Click here to watch the interview.

NRRA CHAIRMAN SANDY ELSASS FEATURED IN AM BEST INTERVIEW

The NRRA Chairman says the Risk Retention Act of 1981 could have never made its way through congress today. Click here to watch the interview.


October 16, 2012

 

ELSASS TO SERVE SECOND TERM AS NRRA CHAIRMAN

Washington, DC -- Sanford Elsass, a builder and manager of Risk Retention Groups, was elected Chairman of the National Risk Retention Association for a second one-year term at the Association's 25th Anniversary Conference. Click here for the full press release.

 

NATIONAL RISK RETENTION ASSOCIATION HONORS ROBERT LARSEN

Washington, DC -- Robert L. Larsen, a founding member of NRRA and a driving force in building support for the Liability Risk Retention Act of 1986, received the Association's Karen Cutts Visionary Award at the Association's 25th Anniversary Conference. Click here for the full press release.


October 5, 2012

NRRA UNVEILS ITS FREE 2012 "APP" FOR HAND-HELD DEVICES 

Just in time for its 2012 Annual Conference next week in Washington, D.C., the National Risk Retention Association (NRRA) has unveiled its new App for hand-held devices. Available for iPhone, Android and Blackberry "smart phones," as well as tablet devices such as the iPad, the new NRRA APP will revolutionize the way NRRA will communicate with the industry. In its effort to show the alternative risk industry that NRRA will put its money where its mouth is, it is FREE, according to Joe Deems, Executive Director of NRRA. "This technology will be a 'must have' for anyone in the industry who wants to keep abreast of current developments."
In addition, it literally takes only minutes to install, according to Deems. Just go to your app store, or wherever you download apps, and put in "NRRA" App. Follow your instructions as you would for any app download, and within a short time you will be up and going. The NRRA banner will take you to the NRRA website, where you can obtain updated news and headlines.

We developed this technology, according to Deems, to accelerate and enhance our 2012 conference participation by attendees and enable our valuable NRRA sponsors and participants to more easily communicate with one another in the current environment. It will continue to be available after the conference and throughout the year, he said.

For further information, contact NRRA at info@riskretention.org, or call our executive offices at (818) 995-3274.


September 14, 2012

NEWS ALERT -- NRRA 25th ANNIVERSARY CONFERENCE TO CONFRONT CHALLENGES FACING RRG INDUSTRY

Washington, DC -- The National Risk Retention Association (NRRA) at its annual Conference October 9-ll in Washington will mark 25 years defending Risk Retention Groups (RRG) and Purchasing Groups (PG) against attempts by some state regulators to restrict their operations in violation of federal law. Clickhere to view the press release.


NRRA LEADERS IN THE NEWS 

NRRA Chairman Sandy Elsass spelled out the issues facing Risk Retention Groups in a cover story that appeared in the August issue of Best’s Review.  If you’re looking for an insider’s perspective on reinsurance for RRGs, check the September issue of Risk Retention Reporter for an in-depth interview with NRRA Board member Ken Barrett, CEO of Besso Re in London. Also appearing in the September issue -- an article by Executive Director Joe Deems on where NRRA is heading as we celebrate the 25th anniversary. If you missed the July issue, look back for our General Counsel Skip Myers’ thought-provoking comments on what it would take to get a Supreme Court decision on RRG operating authority.

August 14, 2012

NRRA CHAIRMAN SANDY ELSASS REPORTS FROM THE VERMONT CAPTIVE INSURANCE ASSOCIATION CONFERENCE ON ISSUES FACING RRGs AND CAPTIVES

Click here and here to see his interviews on World Risk and Insurance News.


August 9, 2012

BRALEY AND BEMI HONORED BY VCIA

Brian Braley and Michael Bemi, two former chairmen of NRRA, were honored by the Vermont Captive Insurance Association at its annual conference for their outstanding contributions to the captive industry. Braley was named a lifetime member of the Association for his industry leadership, and Bemi received the Captive Crusader Award, which is given by the VCIA staff to a member for distinguished service to the Association. Braley, has long been in charge of government relations as Vice President - Legislative Affairs at the Housing Authority Risk Retention Group. Bemi is President and CEO of The National Catholic Risk Retention Group, Inc.



August 8, 2012

VCIA REPORTS CAPTIVE MARKET STRONG AND GROWING

Vermont continues to be the leading captive domicile with 982 captives that write $26.1 billion premium, industry spokesmen reported at the annual Vermont Captive Insurance Association meeting. To date in 2012, 14 new captives have been formed in Vermont. This follows a strong record in 2011 when 41 new captive insurance companies were licensed in the state.

“The market is heating up and getting a bit harder,” Dan Towle, Director of Financial Services, Vermont Department of Economic Development, told reporters at a press conference on opening day.  He noted that newly formed captives in the manufacturing sector signal that the economy is beginning to improve.

Asked if they’re seeing newly emerging exposures including cyber, social media, supply chain and reputational risks in the captive market, Richard Smith, President of VCIA, and Towle said there’s “lots of talk but not much action” as underwriters study how to price these risks. They said medical stop-loss coverage is drawing more interest currently in the captive industry.

THE OTHER NRRA -- A PROBLEM FOR THE CAPTIVE INDUSTRY

A big issue being discussed at the conference is the potential impact on captives of the Non-Admitted and Reinsurance Reform Act (NRRA) that is part of the Dodd-Frank financial legislation. VCIA asserts that NRRA “was never intended to include captive insurance under the definition of “non-admitted insurance.” 

A big issue being discussed at the conference is the potential impact on captives of the Non-Admitted and Reinsurance Reform Act (NRRA) that is part of the Dodd-Frank financial legislation. VCIA asserts that NRRA “was never intended to include captive insurance under the definition of “non-admitted insurance.” 

Richard Smith, President of VCIA, told reporters at a press conference, that the Association has retained counsel in Washington to amend the law to make clear that it does not apply to captive insurance companies. In an earlier statement, Smith wrote, “If the NRRA requires that the placement of non-admitted insurance that includes captives will be subject to the statutory and regulatory requirements solely of the insured’s home state, the whole framework of a strong captive insurance industry is put at risk.”

Rep. Peter Welch of Vermont told the conference general session that he is working on an amendment to Dodd-Frank to remove this threat to the captive industry. He pledged also to continue efforts to build support for HR 2126, the Risk Retention Modernization Act, that would allow RRGs to write commercial property coverage and create a mechanism to resolve disputes with non-domiciliary states without having to go to the federal courts.

July 30, 2012

NEWS ALERT -- NRRA TO FOCUS ON ISSUES AFFECTING PURCHASING GROUPS IN 2012 ANNUAL CONFERENCE

NRRA issued a release to the national trade media today announcing that the association will focus on issues affecting Purchasing Groups (PG) in its annual conference, October 9-11, 2012 in Washington, D.C. Click here to view the press release.


July 19, 2012

STRONG FIRST QUARTER FOR RRGs

In a comprehensive review of first quarter results by Douglas Powell, Senior Financial Analyst at Demotech, the RRG industry recorded improvements across the board. “Risk Retention Groups continue to exhibit financial stability,” Powell reported. Most important, Powell’s analysis showed a constantly improving trend. “In comparing the last five first-quarter results, short-term assets, total admitted assets and policyholders surplus have continued to increase at a quicker rate than total liabilities. Since first-quarter 2008, short-term assets have increased 36.8 percent, and total admitted assets have increased 29.5 percent. More importantly, policyholders surplus has increased 64.3 percent during this time, while total liabilities have only increased 13.5 percent," Powell wrote. The combined loss and expense ratio for the first-quarter was 88.1 percent, an improvement over 90.6 percent in last year’s first quarter, Despite a $10 million net underwriting loss, “RRGs collectively report $49.8 million net income for first-quarter 2012,” Powell stated.

WILL IT TAKE A SUPREME COURT DECISION TO END THE WAR OVER RRG OPERTING AUTHORITY? SEE WHAT NRRA GENERAL COUNSEL ROBERT “SKIP”MYERS HAS TO SAY

In an interview with the Risk Retention Reporter, Myers recounted the history of federal court litigation of challenges to RRGs by non-domiciliary states. On the positive side, he said, “The clear language of the Liability Risk Retention Act and decisions favorable to the industry in some Circuits make it likely that the Supreme Court would uphold preemption of most non-domicile state regulation.” However, Myers pointed out that, “the obstacles to getting a case before the Supreme Court are formidable. It’s a costly process, and you can’t be sure the Court will accept the appeal.” Myers’ bottom line, “It’s a long shot. The bar to acceptance by the Supreme Court is high. Nonetheless, if the right case came along, it could go all the way, and I’m confident the LRRA would be upheld.”  The interview appears in the July issue of Risk Retention Reporter.

RRG INDUSTRY STABLE IN 2011 -- HEALTHCARE SECTOR DRIVES RESULTS

Excluding results for small RRGs -- less than $4.9 million -- premiums for the largest 100 RRGs climbed nearly 3 percent in 2011, reflecting the stability of the sector. Total industry premium was $2,527,700, a decline of 0.3 percent from 2010. The report on 2011 appeared in the June issue of Risk Retention Reporter. While healthcare, with 59 percent of industry premium, registered a decline of 0.7 percent, other major sectors were down also. Transportation premium declined 18 percent. However, total premium for the industry was down only 0.3 percent.

June 14, 2012

NEWS FLASH -- NRRA ANNUAL CONFERENCE 2012

NRRA issued a release to the national trade media today announcing the theme and subject matter of the association's annual conference to be held October 9-12 in Washington, DC.

May 24, 2012

MARKET UPTURN PREDICTED FOR RRGs

After holding relatively steady through the economic downturn, the market for RRGs in 2012 is looking good. In its Quarterly Journal of Statistics, the Risk Retention Reporter states, “The outlook for the risk retention industry indicates that there should be a market upturn.” The Journal reported that at the recent Captive Insurance Companies Association (CICA) annual meeting attended by major RRG captive managers and state regulators, the overall mood was optimistic. “Coupling this positive industry sentiment with the more tangible evidence of several RRGs in the pipeline leads to the belief that formations will outpace retirements by year’s end,” the Journal predicted. At least four RRGs were being formed in the first quarter and reports from large captive managers indicate more are in the licensing process. “If anything, 2012 is shaping up to be a very dynamic year for the risk retention marketplace,” the Journal concluded.  

PREMIUM VOLUME IMPROVED SLIGHTLY IN 2012 -- LARGE RRGs THE BIG WINNERS 

RRG premiums dropped 0.3 percent in 2012 to just over $2.5 billion-- a significant improvement compared to a decline of 3.5 percent in 2010. Growth was concentrated in the large RRGs. According to the Risk Retention Reporter, “size clearly is making a difference in the performance of RRGs.” Of the top 50 RRGs by premium, 35 reported increases while only 15 reported declines. Of the top 100, 68 reported gains in premium while only 32 reported decreases. However, among the other 150 RRGs, the drop in premiums was 24 percent with 84 decliners and only 43 gainers. Some smaller RRGs did not report premiums to the National Association of Insurance Commissioners, which may have somewhat distorted the results.



May 24, 2012


MARKET UPTURN PREDICTED FOR RRGs


After holding relatively steady through the economic downturn, the market for RRGs in 2012 is looking good. In its Quarterly Journal of Statistics, the Risk Retention Reporter states, “The outlook for the risk retention industry indicates that there should be a market upturn.” The Journal reported that at the recent Captive Insurance Companies Association (CICA) annual meeting attended by major RRG captive managers and state regulators, the overall mood was optimistic. “Coupling this positive industry sentiment with the more tangible evidence of several RRGs in the pipeline leads to the belief that formations will outpace retirements by year’s end,” the Journal predicted. At least four RRGs were being formed in the first quarter and reports from large captive managers indicate more are in the licensing process. “If anything, 2012 is shaping up to be a very dynamic year for the risk retention marketplace,” the Journal concluded.  

PREMIUM VOLUME IMPROVED SLIGHTLY IN 2012 -- LARGE RRGs THE BIG WINNERS

RRG premiums dropped 0.3 percent in 2012 to just over $2.5 billion-- a significant improvement compared to a decline of 3.5 percent in 2010. Growth was concentrated in the large RRGs. According to the Risk Retention Reporter, “size clearly is making a difference in the performance of RRGs.” Of the top 50 RRGs by premium, 35 reported increases while only 15 reported declines. Of the top 100, 68 reported gains in premium while only 32 reported decreases. However, among the other 150 RRGs, the drop in premiums was 24 percent with 84 decliners and only 43 gainers. Some smaller RRGs did not report premiums to the National Association of Insurance Commissioners, which may have somewhat distorted the results.


May 8, 2012

MEMBER RESOURCES SECTION NOW AVAILABLE

A comprehensive database compiled exclusively for NRRA members is now available. Members now have the opportunity to view documents that detail the last 5 years of NRRA’s legislative, regulatory and judicial advocacy on your behalf. The database is just one of the benefits offered to members and will be updated regularly as more materials become available. Thank you to all of NRRA’s members for your continuing support.


April 30, 2012

DEMOTECH GIVES RRGs HIGH MARKS

 

In a just-published study of 2011 results, Demotech Senior Financial Analyst Douglas Powell reported that Risk Retention Groups as an industry are financially stable with growing assets and policyholders’ surplus along with strong liquidity and a continuing favorable leverage ratio. Demotech has been issuing Financial Stability Ratings® to property/casualty insurers since 1989.

 

Powell reported that all metrics confirmed that RRGs as a group remained strong through the economic downturn and continue to grow in 2011:

 

  • RRGs as a collective group reported positive net income since 1996 and profitable underwriting results since 2004 despite difficult continuing economic conditions.
  • Assets and policyholders’ surplus increased for the 12th consecutive year with surplus up more than 367 percent, going from approximately $686 million in 2000 to more than $3.2 billion in 2011.
  • Liquidity, as measured by liabilities to cash and invested assets, was about 69 percent in 2011 compared to more than 72 percent in 2010. A value less than 100 percent is favorable because there was more than $1 of net liquid assets for each $1 of total liabilities.
  • Leverage, measured by total liabilities to policyholders surplus for 2011 was about 136 percent -- an improvement over 146 percent in 2010.
  • Policyholders’ surplus accounted for 43 percent of the industry’s $7.7 billion total net assets .
  • The loss adjustment and expense ratio was 39 percent of total admitted assets.
  • Direct written premiums decreased 1.9 percent in 2011 but so did expenses.

 


NRRA COUNSEL COMMENTARY

 

The Demotech study also included a guest commentary by NRRA General Counsel Robert Myers, Jr. Myers challenged the recent federal Government Accountability Office report on RRGs for wrongly interpreting the Liability Risk Retention Act. “The GAO’s flawed analysis is most prominent in its examination of non-domiciliary registration requirements, fees and non-discriminatory financial responsibility requirements,” Myers wrote.

 

“The GAO report misstates that the ‘Liability Risk Retention Act does not provide for a specific process for RRGs to register to conduct business in non-domiciliary states.’ In fact, the LRRA plainly states that the registration requirements in a non-domiciliary state are limited to submitting the documents specified under 15 U.S.C.  § 3902 (d) (2). Unless expressly excepted under 15 U.S.C. 3902 (a) (1), all other state laws are broadly preempted,” he pointed out. According to the GAO report, “The silence of LRRA on fees has prompted state insurance regulators and RRG representatives to interpret the law differently.” However, Myers noted that LRRA is not ‘silent’ on fees. “Rather, the plain language of the LRRA broadly and expressly exempts non-domiciliary RRGs from any law other than those exempted under §3902 (a) (1)…”

 

Myers also pointed out that some non-domiciliary state regulators have relied upon and expanded the intended scope of  § 3905 (d), which permits states to require “acceptable means of demonstrating financial responsibility.” However, any regulation pursuant to § 3905 (d) is also subject to the non-discrimination provisions of § 3902 (a) (4), Myers noted, adding “Consequently, any requirement imposed as a demonstration of financial responsibility must be non-discriminatory against RRGs.” He noted that the courts have been divided on this issue. However, according to Myers, the Ninth Circuit Court acknowledged the fundamental flaws in opinions by the Seventh and Eleventh Circuit Courts. “Based on the plain language of the Liability Risk Retention Act and underlying policy concerns, the Ninth Circuit correctly interpreted §§ 3905 (d) and 3904 (a) (4) to prohibit any categorical exclusion of all RRGs regardless of intent,” Myers wrote.

April 16, 2012

NEWS ALERT -- NRRA CHALLENGES GAO REPORT

NRRA issued a release to the national trade media today challenging the Government Accountability Office for findings in its recent report to Congress. Click here to view the press release.

NRRA Executive Director, Joe Deems Offers His Views on the January 2012 GAO Report in the February Issue of the Risk Retention Reporter

In the first part of a two-part series covering reaction to the January 2012 GAO report, NRRA Executive Director, Joe Deems answered a number of questions from the Risk Retention Reporter, "to inform the debate on whether the GAO report went far enough and how it will affect efforts to enact legislation that would resolve continuing disputes over the preemptive issue."

 

Click here to view Part 1.

 

In Part 2, Mike Lynch, deputy commissioner - Captive Program, Nevada Division of Insurance; Sean O'Donnell, director of financial examinations - D.C. Department of Insurance, Securities and Banking; and David Provost, deputy commissioner - Captive Insurance, Vermont Department of Banking, Insurance, Securities and Health Care Administration offer their views.

 

Click here to view Part 2.



NRRA Newsletter Archive



February 2012 Newsletter (2/1/2012)

September 2011 Newsletter (9/1/2011)