NAMIC opposes NPPA insurance regulation citing concern for state markets
The bill would allow certain risk-retention groups serving nonprofits to offer additional types of commercial insurance.
Citing concern for state market disruptions, the National Association of Mutual Insurance Companies (NAMIC) issued a statement opposing the proposed Nonprofit Property Protection Act (NPPA), an insurance regulation that would allow certain risk-retention groups that serve nonprofit organizations to offer additional types of commercial insurance.
In the statement and in testimony to the House, NAMIC expressed concern over the implications the proposed insurance regulation would have on state marketplaces and consumer protections.
The bill (H.R. 4523) would allow risk retention groups, known as RRGs, to offer property coverage, including auto insurance, to 501(c)(3) non-profit organizations, in competition with admitted insurers that are subject to the regulations of each state in which they offer coverage.
By its definition, RRGs can operate in multiple states while only being subject to the regulation of the state in which they are domiciled, and they do not participate in state guaranty funds.
Opposing testimony warns of market disruption
NAMIC says RRGs were created to address an availability crisis for liability insurance in the 1980s. Testifying against the bill to the House Financial Services Subcommittee on Housing, Insurance, and Community Development, NAMIC’s Jon Bergner said that no similar crisis exists currently in the availability of property coverage, and lawmakers should be wary of making changes to state-based insurance regulation.
“Allowing RRGs to sell the same commercial insurance products already offered in the admitted markets simply gives them an unfair competitive advantage over traditional insurance companies that abide by all the regulatory standards and consumer protections of each state in which they operate,” Bergner testified.
“[The RRG structure] was specifically designed to deal with a widely recognized crisis in commercial liability insurance markets in the 1980s. No such crisis exists today in the commercial property market.”
Also testifying against the bill, Chlora Lindley-Myers, director of the Missouri Department of Commerce and Insurance and an officer in the National Association of Insurance Commissioners, urged subcommittee members to note the opposition of primary insurers, independent insurance agents, and regulators to the legislation.
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