NU Online News Service, July 29, 4:04 p.m. EDT
A letter to Nevada officials requesting that the state stop discriminating against a risk retention group underscores the need for a Government Accountability Office RRG report, counsel for an RRG association said.
The National Risk Retention Association (NRRA) said it is supporting The Alliance of Nonprofits for Insurance, Risk Retention Group (ANI-RRG) in its response to Nevada's position that the RRG is not allowed to write commercial auto liability coverage in the state.
Nevada is a captive domicile with 25 of its own RRGs formed in the state. ANI-RRG is domiciled in Vermont, but under the federal Liability Risk Retention Act it should be allowed to operate in the state, the RRG contends.
Robert H. "Skip" Myers Jr., NRRA general counsel explained, "You've got one state of domicile that under the federal law is supposed to do almost all the regulatory functions," leaving non-domicile states with limited regulatory authority.
He continued, "Some of the other states don't like that very much, so they attempt to regulate the RRGs without authority to do so in some cases."
NRRA sent letters to both the Nevada attorney general and the acting commissioner of the Nevada Division of Insurance.
In his letter to Nevada Insurance Commissioner Brett J. Barratt, dated July 26, Mr. Myers said, "The division is discriminating against RRGs in a manner prohibited by federal law.
"Under Nevada law, every owner of a motor vehicle registered in the state must have liability insurance 'provided by an insurance company licensed by [the division] and approved to do business in the state,'" he said in the letter.
ANI is "an RRG domiciled in Vermont, [but] it is registered to do business in Nevada and received a certificate of registration from the division on Oct. 19, 2001," Mr. Myers said.
"We're in the process of trying to persuade Nevada to change its mind. I don't know whether they're going to respond to us or not, but we're going to keep beating the drum," Mr. Myers told NU Online news Service.
A call to the Nevada insurance commissioner was not returned.
Earlier this month a federal probe was ordered into whether state insurance regulators are overstepping their authority when it comes to risk retention groups.
The directive came from Rep. Dennis Moore, D-Kan., chair of the House Oversight Committee on Financial Services, who directed the GAO to study instances when non-domiciliary states attempt to improperly regulate the operation of RRGs through such tactics as "cease and desist" orders, onerous filing requirements, imposition of fees, waiting periods, information requests or other means.
Mr. Myers said, "The need for the report is that we have a federal law that has no oversight by a federal agency, and the states take various interpretations of the law and it's very difficult to do business that way."
The issue with Nevada, Mr. Myers said, "illustrates the need for a federal ombudsman or federal dispute resolution. We want one rule all over the country, and we can live with that. What we can't live with is 50 rules."
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