2024 Recap: Risk Retention Group Legislative and Regulatory Advocacy Initiatives

Intro: NRRA’s Role in Risk Retention Group Legislation and Regulation

There is a general lack of knowledge, misunderstanding, and misinformation concerning risk retention groups (RRGs) and their unique characteristics within the wider insurance industry and among state regulators and legislators.

One of the most significant ways the National Risk Retention Association (NRRA) supports its members as well as the entire risk retention group community is through its education and advocacy work for risk retention groups and risk purchasing groups (RPGs), protecting the preemption provisions of the Federal Liability Risk Retention Act (LRRA). NRRA directly or indirectly represents more than 245 RRGs and RPGs, defending their rights to do business in the courts, conducting advocacy campaigns, communicating with regulators and legislators, and representing them before the National Association of Insurance Commissioners (NAIC).

Below is a summary of some of the advocacy related work NRRA has done on behalf of all risk retention groups and risk purchasing groups in 2024.

2024 RRG Legislative and Regulatory Advocacy Recap

Fought Discrimination Against Transportation RRGs in Florida

In 2023, the Florida Senate approved a bill that would have required risk retention groups writing commercial auto liability in Florida to carry an A.M. Best “A” rating as well as to have a minimum capital surplus of $100M. If signed into law, the bill would have had a devastating impact on trucking and transportation risk retention groups and potentially would have caused thousands of RRG owner-insureds to lose their coverage in Florida. NRRA immediately launched an advocacy campaign to oppose the bill. And the bill was defeated.

In 2024, an alternative bill authored by NRRA was passed and signed into Florida law, removing the AM Best rating and size requirements for RRGs and clarifying that RRGs are insurance companies authorized to provide commercial auto liability coverage to their members in the state.

NRRA is preparing to return to Florida for the 2025 legislative session with a companion bill to further clarify that all RRGs are authorized to do insurance business in Florida. This seeks to bring a halt to misapplication of the Florida law defining “authorized insurers” as those licensed and admitted in the state. While RRGs are not “authorized insurers” under that statute, they are licensed in their states’ of domicile and are authorized to do business in Florida under both LRRA and the Florida state risk retention group statutes. The proposed legislation seeks to clarify this authority of risk retention groups.

Challenged New Mexico’s Unlawful Fraud Assessment Fee

NRRA and its members have been communicating with New Mexico regarding its illegal levy of a fraud assessment fee on RRGs. NRRA will update its members when New Mexico acts.

Negotiated the End to an Illegal Registration Fee in North Carolina

After communication with NRRA and NRRA members, North Carolina removed an annual $1,500 registration fee and revised a renewal form that violated the LRRA. RRGs can now simply submit an intent to continue business in North Carolina annually. North Carolina also reduced its premium tax for RRGs from 5% to 1.35%.

Seeking to Amend a Law Forbidding Contractor LLCs Insured by RRGs from being licensed in California.

In 2009 a law was passed in California that forbids a Limited Liability Company (LLC) from getting a contractors license in California if it is insured by an RRG (although there is no such requirement for corporations). NRRA is in the process of working with the California State Contractors License Board staff and board to propose legislation to amend the law to enable contractor LLCs to be insured by RRGs.

Looking Ahead to 2025

In addition to continuing the above Florida, California, and New Mexico initiatives, NRRA plans to launch some exciting new legislative and regulatory related resources in 2025.

Virtual RRG Regulator Educational Sessions

NRRA will host virtual RRG educational sessions for NAIC, domiciliary, and all regulators. These sessions will be announced soon.

NRRA “Town Hall” Meetings

NRRA will launch virtual “Town Hall” meetings open to all NRRA members that will provide background and updates on issues that the NRRA Government Affairs Committee (GAC) is presently working on. The round table discussion format of these meetings will provide an  informal and approachable forum for members to learn about NRRA’s activities and initiatives underway on their behalf as well as connect with the GAC and others to share knowledge, ask questions, and have conversations.

Enhanced Members Only Portal Resources

In addition to newsletter and social media advocacy updates, NRRA will publish detailed summaries of advocacy initiatives with timely updates and access to any available relevant resources. NRRA members will have permanent access to this content in the members only portal.

Consider Becoming a NRRA Member

Every NRRA membership helps to support advocacy for risk retention groups and risk purchasing groups across the nation. If you are part of the select group of companies that form (or do business with) a risk retention group or risk purchasing group, NRRA’s advocacy efforts are for your benefit. As you plan for the new calendar year, consider becoming a member of NRRA to help give back and support this unique and purpose-driven industry and its long-term wellbeing. Some of the added benefits of NRRA membership include access to regulatory assistance from our Government Affairs Committee, discounted conference rates, access to a premium finance program for RRGs, invitation to NRRA Town Hall meetings, as well as access to our RRG “Toolkit” of materials and best practices to help RRGs design business plans, ensure regulatory compliance, adapt to the regulatory environment, and craft unique policies. Become a member of NRRA today.