Seeing an opportunity to expand the Liability Risk Retention Act of 1986 to include property risks this year, the American Risk Retention Coalition last week delivered a letter to Rep. Richard Baker, R-La, calling for the law's expansion to help solve an emerging insurance availability crisis in coastal areas.
However, another alternative market group wondered about the timing of the effort, with Congress due to recess in September and awaiting recommendations stemming from a Government Accountability Office report on risk retention groups.
"There is a generalized concern about the availability of property insurance along the coast," said Lawrence Mirel, legal counsel of the recently formed ARRC and former insurance commissioner of Washington, D.C., now with Wiley Rein & Fielding.
He told National Underwriter that although this is a busy time for Congress, "this has become more of an issue as some insurers pull back from providing property coverage, creating a crisis of availability."
A solution, he said, is to allow RRGs, "which are a kind of self-insurance, to sell property insurance. That's what was done by Congress in 1986, when the crisis then was liability insurance--and it worked."
He said the timing is excellent because Rep. Baker has started an initiative to enact pieces of the State Modernization and Regulatory Transparency (SMART) Act.
Brian Donovan, chairman of the National Risk Retention Association and president of STICO Mutual Insurance Company, a risk retention group in Arlington Heights, Ill., wondered at ARRC's timing.
"Are they going to get Congress to go into an extended session? I doubt it," he said, adding that NRRA has "been talking to the staff people on committees about it for five years." He said that although NRRA thinks the issue is important, "if Congress isn't prepared to review the LRRA, it's silly for us to keep banging on that door."
Mr. Donovan said Congress' focus is on resolving issues tied to the GAO report on RRGs, and on working with the National Association of Insurance Commissioners, which has been charged with making recommendations to Congress. "When Congress is prepared to deal with this, which probably won't be until sometime next year, then we can focus on it," he said.
NRRA, he said, supports expansion of the LRRA to include property, as well as "a number of other issues brought up in the GAO report. We've spent a lot of time on the Congressional side making sure they understand our positions," but he doubted whether Congress would "move forward over the next two months on expansion of the LRRA."
Mr. Mirel said the GAO report made it clear that the LRRA has served well in "the limited purpose for which it was enacted--to help cope with an availability crisis in the medical malpractice area." ARRC's timing couldn't be better, he added, "because people don't think about hurricanes in January; they think about them in July and August. So, we're trying to make the pitch when there is a lot of concern about it."
He said that Rep. Baker, in particular, "represents a jurisdiction that has been battered by these storms and is very well aware of the problem."
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