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RISK RETENTION GROUPS
Among the states, the statutes and regulations are so
dissimilar that in some jurisdictions a Risk Retention Group will be
distinguishable from other insurers only by its name. In others, it will be
little more than a private club with very little control over the managers
beyond occasional Q. Must a Risk
Retention Group qualify for licensing as an insurer in ALL states where it
intends to offer insurance? No. In fact a Risk Retention Group does not even need to
be licensed in the state or states where the majority of its members reside
or where the bulk of its business will be done. It is only necessary for a
Risk Retention Group to be chartered and licensed in one (1) state in order
for it to conduct business in any or U other states. If it is too difficult
or expensive to qualify in the states where you are, you need only get a
proxy and an address to file and obtain a charter or license in a state that
may be more accommodating. Then, all you need do is to send a copy of the
license and operational plans filed with your “home” state to the insurance
commissioner of any state in which you want to do business. Q. What else must
a Risk Retention Group do to qualify? It must submit its business plan (and any revisions to it)
and its annual audited and actuarially qualified financial statement to the
Insurance Commissioner of its “home” state. It must submit copies of these
documents to any state in which it proposes to do business. The key state is the “home” state or state of domicile.
Yet the Liability Risk Retention Act of 1986 only requires that a “plan of
operation or a feasibility study” be submitted. The Act itself is
silent on whether such plan or study has to be approved or even acknowledged
by the “Home” state before the Risk Retention Group commences to do business.
However, since the Act empowers states to regulate their “formation and
operation”, the states have a lot of latitude in establishing approval
criteria, provided, of course, they are no more stringent than the rules for
other liability insurers. |
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