§ 3902. — Risk retention groups.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC3902]
TITLE 15--COMMERCE AND TRADE
CHAPTER 65--LIABILITY RISK RETENTION
Sec. 3902. Risk retention groups
(a) Exemptions from State laws, rules, regulations, or orders
Except as provided in this section, a risk retention group is exempt
from any State law, rule, regulation, or order to the extent that such
law, rule, regulation, or order would--
(1) make unlawful, or regulate, directly or indirectly, the
operation of a risk retention group except that the jurisdiction in
which it is chartered may regulate the formation and operation of
such a group and any State may require such a group to--
(A) comply with the unfair claim settlement practices law of
the State;
(B) pay, on a nondiscriminatory basis, applicable premium
and other taxes which are levied on admitted insurers and
surplus lines insurers, brokers, or policyholders under the laws
of the State;
(C) participate, on a nondiscriminatory basis, in any
mechanism established or authorized under the law of the State
for the equitable apportionment among insurers of liability
insurance losses and expenses incurred on policies written
through such mechanism;
(D) register with and designate the State insurance
commissioner as its agent solely for the purpose of receiving
service of legal documents or process;
(E) submit to an examination by the State insurance
commissioners in any State in which the group is doing business
to determine the group's financial condition, if--
(i) the commissioner of the jurisdiction in which the
group is chartered has not begun or has refused to initiate
an examination of the group; and
(ii) any such examination shall be coordinated to avoid
unjustified duplication and unjustified repetition;
(F) comply with a lawful order issued--
(i) in a delinquency proceeding commenced by the State
insurance commissioner if there has been a finding of
financial impairment under subparagraph (E); or
(ii) in a voluntary dissolution proceeding;
(G) comply with any State law regarding deceptive, false, or
fraudulent acts or practices, except that if the State seeks an
injunction regarding the conduct described in this subparagraph,
such injunction must be obtained from a court of competent
jurisdiction;
(H) comply with an injunction issued by a court of competent
jurisdiction, upon a petition by the State insurance
commissioner alleging that the group is in hazardous financial
condition or is financially impaired; and
(I) provide the following notice, in 10-point type, in any
insurance policy issued by such group:
``notice
``This policy is issued by your risk retention group. Your risk
retention group may not be subject to all of the insurance laws and
regulations of your State. State insurance insolvency guaranty funds are
not available for your risk retention group.''
(2) require or permit a risk retention group to participate in
any insurance insolvency guaranty association to which an insurer
licensed in the State is required to belong;
(3) require any insurance policy issued to a risk retention
group or any member of the group to be countersigned by an insurance
agent or broker residing in that State; or
(4) otherwise, discriminate against a risk retention group or
any of its members, except that nothing in this section shall be
construed to affect the applicability of State laws generally
applicable to persons or corporations.
(b) Scope of exemptions
The exemptions specified in subsection (a) of this section apply to
laws governing the insurance business pertaining to--
(1) liability insurance coverage provided by a risk retention
group for--
(A) such group; or
(B) any person who is a member of such group;
(2) the sale of liability insurance coverage for a risk
retention group; and
(3) the provision of--
(A) insurance related services;
(B) management, operations, and investment activities; or
(C) loss control and claims administration (including loss
control and claims administration services for uninsured risks
retained by any member of such group);
for a risk retention group or any member of such group with respect
to liability for which the group provides insurance.
(c) Licensing of agents or brokers for risk retention groups
A State may require that a person acting, or offering to act, as an
agent or broker for a risk retention group obtain a license from that
State, except that a State may not impose any qualification or
requirement which discriminates against a nonresident agent or broker.
(d) Documents for submission to State insurance commissioners
Each risk retention group shall submit--
(1) to the insurance commissioner of the State in which it is
chartered--
(A) before it may offer insurance in any State, a plan of
operation or a feasibility study which includes the coverages,
deductibles, coverage limits, rates, and rating classification
systems for each line of insurance the group intends to offer;
and
(B) revisions of such plan or study if the group intends to
offer any additional lines of liability insurance;
(2) to the insurance commissioner of each State in which it
intends to do business, before it may offer insurance in such
State--
(A) a copy of such plan or study (which shall include the
name of the State in which it is chartered and its principal
place of business); and
(B) a copy of any revisions to such plan or study, as
provided in paragraph (1)(B) (which shall include any change in
the designation of the State in which it is chartered); and
(3) to the insurance commissioner of each State in which it is
doing business, a copy of the group's annual financial statement
submitted to the State in which the group is chartered as an
insurance company, which statement shall be certified by an
independent public accountant and contain a statement of opinion on
loss and loss adjustment expense reserves made by--
(A) a member of the American Academy of Actuaries, or
(B) a qualified loss reserve specialist.
(e) Power of courts to enjoin conduct
Nothing in this section shall be construed to affect the authority
of any Federal or State court to enjoin--
(1) the solicitation or sale of insurance by a risk retention
group to any person who is not eligible for membership in such
group; or
(2) the solicitation or sale of insurance by, or operation of, a
risk retention group that is in hazardous financial condition or is
financially impaired.
(f) State powers to enforce State laws
(1) Subject to the provisions of subsection (a)(1)(G) of this
section (relating to injunctions) and paragraph (2), nothing in this
chapter shall be construed to affect the authority of any State to make
use of any of its powers to enforce the laws of such State with respect
to which a risk retention group is not exempt under this chapter.
(2) If a State seeks an injunction regarding the conduct described
in paragraphs (1) and (2) of subsection (e) of this section, such
injunction must be obtained from a Federal or State court of competent
jurisdiction.
(g) States' authority to sue
Nothing in this chapter shall affect the authority of any State to
bring an action in any Federal or State court.
(h) State authority to regulate or prohibit ownership interests in risk
retention groups
Nothing in this chapter shall be construed to affect the authority
of any State to regulate or prohibit the ownership interest in a risk
retention group by an insurance company in that State, other than in the
case of ownership interest in a risk retention group whose members are
insurance companies.
(Pub. L. 97-45, Sec. 3, Sept. 25, 1981, 95 Stat. 950; Pub. L. 99-563,
Secs. 5, 7, 8(a), 12(c), Oct. 27, 1986, 100 Stat. 3172, 3175, 3178.)
Amendments
1986--Subsec. (a)(1)(C). Pub. L. 99-563, Sec. 12(c), struck out
``product liability or completed operations'' before ``liability
insurance losses''.
Subsec. (a)(1)(D). Pub. L. 99-563, Sec. 5(b)(1), redesignated
subpar. (E) as (D), substituted a semicolon for ``, and, upon request,
furnish such commissioner a copy of any financial report submitted by
the risk retention group to the commissioners of the chartering or
licensing jurisdiction;'', and struck out former subpar. (D) which read
as follows: ``submit to the appropriate authority reports and other
information required of licensed insurers under the laws of a State
relating solely to product liability or completed operations liability
insurance losses and expenses;''.
Subsec. (a)(1)(E). Pub. L. 99-563, Sec. 5(b)(1)(A), (c),
redesignated subpar. (F) as (E), further redesignated cl. (ii) as (i),
added cl. (ii), and struck out former cl. (i) which read as follows:
``the commissioner has reason to believe the risk retention group is in
a financially impaired condition; and''. Former subpar. (E) redesignated
(D).
Subsec. (a)(1)(F). Pub. L. 99-563, Sec. 5(b)(1)(A), (d),
redesignated subpar. (G) as (F) and amended it generally. Prior to
amendment, subpar. (F) read as follows: ``comply with a lawful order
issued in a delinquency proceeding commenced by the State insurance
commissioner if the commissioner of the jurisdiction in which the group
is chartered has failed to initiate such a proceeding after notice of a
finding of financial impairment under subparagraph (F) of this
paragraph;''. Former subpar. (F) redesignated (E).
Subsec. (a)(1)(G) to (I). Pub. L. 99-563, Sec. 5(b)(1)(A), (e),
added subpars. (G) to (I). Former subpar. (G) redesignated (F).
Subsec. (b). Pub. L. 99-563, Sec. 5(a), amended subsec. (b)
generally. Prior to amendment, subsec. (b) read as follows: ``The
exemptions specified in subsection (a) of this section apply to--
``(1) product liability or completed operations liability
insurance coverage provided by a risk retention group for--
``(A) such group; or
``(B) any person who is a member of such group;
``(2) the sale of product liability or completed operations
liability insurance coverage for a risk retention group; and
``(3) the provision of insurance related services or management
services for a risk retention group or any member of such group.''
Subsecs. (d) to (h). Pub. L. 99-563, Secs. 5(b)(2), 7, 8(a), added
subsecs. (d) to (h).
Special Rule Regarding Feasibility Study
The provisions of subsec. (d) of this section, relating to the
submission of a feasibility study, not applicable with respect to any
line or classification of liability insurance which was defined in this
chapter before Oct. 27, 1986, and was offered before such date by any
risk retention group chartered and operating for not less than 3 years
before such date, see section 11(b) of Pub. L. 99-563, set out as an
Effective Date of 1986 Amendment; Applicability note under section 3901
of this title.
Section Referred to in Other Sections
This section is referred to in section 3905 of this title.
