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Risk Retention Group Wins Fight to Offer Auto Liability to Members

Source: IFAWebnews

Posted on 25 Jul 2011

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The U.S. District Court in Nevada has ruled in favor of a risk-retention group in its fight against that state’s attempt to bar its operations despite federal preemption under the Liability Risk Retention Act (LRRA).

The United States District Court for the District of Nevada, in Las Vegas, agreed that the Nevada Department of Insurance had overstepped its legal bounds by ordering The Alliance of Non-Profits for Insurance Risk Retention Group (ANI), a Vermont-licensed risk-retention group, to cease writing automobile liability insurance policies for its members.

The Self-Insurance Institute of America, a national trade association representing companies involved in the self-insurance and alternative risk transfer industry, said it “welcomed the victory.” SIIA had submitted an amicus brief in support of the risk-retention group.

“This judgment solidifies the federal right of risk retention groups to operate in non-domicile states without interference by regulatory agencies,” said Mike Ferguson, SIIA chief operating officer, in a statement. “The court apparently agreed with the position of our brief stating that non-domicile states are limited to regulation affecting solvency rather than their scope of coverage.”

ANI, an active SIIA member, was granted summary judgment in its favor after maintaining that it was operating within the parameters of the 1986 LRRA and that the Nevada cease and desist order of 2010 violated the act’s commerce clause.

SIIA officials said they support federal legislation to modernize the LRRA, in part to prevent such interference by non-domicile states as occurred in Nevada, and to establish enforcement of risk-retention groups’ federal preemption.