Not All Captive States Alike For RRGs
When the Liability Risk Retention Act was enacted in 1986, less than a dozen states had captive laws. Since that time, the number of states with captive laws has more than doubled, with 23 states having captive laws on their books as of year-end 2003.
Of these states, 16 permit risk retention groups to be formed under their captive laws. If an RRG were to form in a state with a captive law that did not permit formation of RRGs, the RRG would have to become licensed as an admitted insurer, subject to that state's capital and surplus rules and other requirements for traditional insurers. However, the RRG could still operate nationally because of the preemptions afforded to RRGs by the Liability Risk Retention Act.
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