LRRA authorizes RRGs licensed in a single state to operate nationally without additional licensing and free of most regulation by other states.

Gregg Sgambati, president of the New Jersey Captive Association, reminds NU Online News Service via e-mail that Congress is looking to review LRRA. "We know that some congressional action is on the horizon. The fact that there are articles within the LRRA that need clarification is evident by the time that is being consumed on legislative action concerning RRGs in some states."

He adds, "It should be emphasized that this [New Jersey] legislation only relates to RRGs writing taxicab liability insurance. While New Jersey may have concerns about RRGs in this business, it does not imply that the state is averse to RRGs operating in the state nor the possibility of adding RRGs to the state's captive insurance statutes in the future."

"To put it from the legislators' point of view, they are looking to protect taxicab passengers from an inability to collect a claim if an RRG failed."

Sgambati notes, "While one has to applaud that intent, it is preferable to address this intent with a bill that does not disrupt the current industry while Congress works on the LRRA."

Myers points out in his letter that federal courts have ruled in favor of the preemption provision of the LRRA. He cites a case in which the Ninth U.S. Circuit Court of Appeals "held that the LRRA preempted provisions of the Oregon Service Contract Act which unlawfully discriminated against RRGs by requiring automobile dealers to obtain liability insurance from the Oregon Insurance Guaranty Association."

The court ruled in that instance that the Oregon law "may not categorically exclude coverage from all RRGs," Myers says. 

GAO REPORT

The Government Accountability Office is currently examining the direct and indirect regulation of RRGs by non-domiciliary states.

At the Captive Insurance Companies Association (CICA) conference in Tucson earlier this month, the GAO arranged for dialogue in two separate sessions: one for captive managers and one for captive owners.

GAO representatives asked for examples of challenges to RRG owners in both domiciliary and non-domiciliary states.

In a list of questions obtained by NU Online News Service, the GAO asked if the identified challenges affected costs or efficiency of RRGs, and if "regulatory or legal actions taken by state regulators [are] contrary to LRRA."

The GAO also asked about:

• Trends that have been observed in terms of the amount and type of coverage offered.
• Whether RRGs are having an impact on the availability of commercial liability insurance coverage.
• If RRGs are having an impact on the affordability of commercial liability coverage.

The GAO also wanted to know what potential risk and benefits could result from extending the LRRA to permit RRGs to provide commercial property insurance.