A court showdown between the California insurance department and a Montana risk retention group will ultimately determine whether RRGs governed by federal law have the necessary flexibility to fill market gaps or face increased regulatory control by nondomiciliary states.
Following a cease-and-desist order against Auto Dealers Risk Retention Group by the California Department of Insurance in December, AD-RRG immediately moved the venue from an administrative forum to the U.S. District Court, Eastern District of California, and filed various actions against the state.
The actions include motions for a temporary restraining order and preliminary and permanent injunctions. The court granted the TRO, and set a court hearing for Feb. 22 on the motions for the injunctions.
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