BURLINGTON, VT–An attorney representing risk retention group insurers said he is optimistic that legislation will be introduced in the next Congress to allow RRGs to offer property coverage.
That assessment came from Robert W. Minto Jr., president and chief executive officer of Lawyers Reinsurance Company in Missoula, Mt., who said he and a group of “basically friends” has gotten together to lobby for expansion of the federal Liability Risk Retention Act.
Currently under the act, insurance companies that group together as self-insurers to form RRGs are limited to offering liability insurance.
Mr. Minto, who also is president and CEO of ALPS Corporation and chairman and CEO of Attorneys Liability Protection Society Inc., a risk retention group, was here as a co-facilitator at a group captive roundtable at the Vermont Captive Association annual conference.
He said his group's push for the change in the act is separate from the lobbying efforts underway of two formal organizations that represent RRGs.
“We're going down a parallel track that ARRC [American Risk Retention Coalition] is going down,” he said, as well as “a parallel track that NRRA [National Risk Retention Association] is going down, and we've worked closely with people at NRRA, but we're not affiliated with any organization on this.”
NRRA has worked for the past five years to expand the act. The ARRC was recently formed for this purpose and has announced it is pushing for immediate expansion of the federal act to ease a shortage of property coverage options in the aftermath of Hurricane Katrina.
Mr. Minto explained that his group's idea was that “it would be a lot better if we as individuals could make the case, because Congress likes to hear from constituents–they like to hear from people on the ground–not necessarily the hired guns that get employed as lobbyists.”
He added, “I think we will have a good chance at having a bill in this next Congress [in 2007]. We are talking to a couple of people–both Democrats and Republicans–about sponsoring this bill.”
He said the current climate is receptive because of the “reality that when the Risk Retention Act was changed in 1986, it changed the landscape of alternative risk mechanisms. We have a real opportunity, now that we have 20 years of experience under the LRRA, to see how it worked for liability. Now we're going to take the next step.”
He said the expansion probably would not change much of what exists except for coordination, adding, “I think you're going to see a whole new bill, because there are some things in there that Congress will want to deal with, such as some of the governance issues discussed in the GAO report.”
The Government Accountability Office (GAO) issued a report on risk retention groups last year. Since then the National Association of Insurance Commissioners has been addressing aspects of the GAO report dealing with state regulation and governance.
Mr. Minto said he expects the move to expand LRRA provisions to proceed, even though the NAIC committees have not yet made their recommendations, because “Congress is going to address the issues that deal with the necessary legislative mandates, so we don't need to wait.”
Mr. Minto noted the next step in the process is to get sponsors signed on and to have the appropriate legislation referred to the appropriate subcommittees in the Senate and House in order to hold hearings. “We hope to have the whole thing done by mid-term break,” he emphasized.
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