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THE RISK
RETENTION ACT DISADVANTAGES: ∎ Risks limited to liability insurance; ∎ Not permitted to write outside
business; ∎ No guaranty fund availability for
members; and ∎ May not be able to comply with
proof of financial responsibility laws. Over the past 40 years, with few exceptions,
Congress has left regulation of the insurance industry to the states, each of
which have their own requirements, including licensing laws, “seasoning”
requirements, fictitious group laws, restrictions on the ability of insurers
to offer to a group special terms regarding rates and coverage, higher tax
rates on foreign (out of state) insurers, and countersignature laws. To help promote the formation and
multi-state operation of group liability insurance programs, Congress enacted
the Products Liability Risk Retention Act in 1981 and expanded its scope
through amendments in 1986. With the
advent of the 1986 Risk Retention Act, counter-signature and fictitious group
laws, which had previously restricted formation of group purchase of
liability coverage, were eliminated.
Moreover, Congress prohibited discrimination against risk retention
states. It was the Congressional
intent to enable businesses, professionals, non-profit organizations and
governmental agencies to establish self-insurance pools (RRGs). |
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F.
Darrell Lindsey State
Approved Captive/RRG Manager |
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CLICK TO: ● RRG - Essentials |
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