A year-long legal battle with Nevada regulators has paid off for a risk-retention group (RRG) in the form of a decision that should set a precedent for all RRGs, a trade association says.
The United States District Court for the District of Nevada in Las Vegas concluded that the Nevada Division of Insurance (NDI) overstepped its legal bounds by ordering the Alliance of Nonprofits for Insurance Risk Retention Group (ANI) to cease writing automobile-liability insurance policies for its nonprofit association members.
“The case has to do with the State of Nevada not recognizing that an authorized insurer included a risk-retention group,” says Robert H. Myers Jr., general counsel for the National Risk Retention Association (NRRA) and a partner with Morris, Manning & Martin LLP. He adds that the case was generated by the Nevada Department of Motor Vehicles, which obtained “a list of 'authorized insurers' from the Department of Insurance.'”
The judgment is good news for ANI and for RRGs in general, Myers says. “It should be looked at by other states as a reason why they should try to clear these issues up rather than take them to trial,” he notes.
ANI is an A-rated A.M. Best carrier with “lots of surplus. It's a ridiculous one to pick on,” Myers adds. The RRG is domiciled in the state of Vermont.
In February, the NRRA requested a federal court order to prevent the NDI from enforcing a cease-and-desist order to prevent the RRG from operating in the state.
In an amicus brief, NRRA sought an injunction against enforcement of an NDI order that would require ANI to obtain a fronting arrangement with an insurance company that holds a Nevada Certificate of Authority in order to do business in the state.
The NRRA contended that ANI should be allowed to conduct business in Nevada under the Liability Risk Retention Act of 1986 (LRRA), which authorized RRGs to do business nationally when domiciled in a single state.
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