Monday, March 18, 2013

The Coming Crossroads for LRRA Legislation

It’s been a while since we’ve reported on efforts to modernize the Liability Risk Retention Act through federal legislation, but there may be some new developments this spring worth discussing.

A key congressional source confirmed today that draft legislation is currently being vetted in the House prior to potential introduction in the next month or two.  While previous versions of the bill included a federal arbitration provision to address situations where non-domiciliary regulators take actions against RRGs operating in their state that should be preempted by the LRRA, this provision will not be included in this year’s bill if it introduced.

This is largely a political consideration, as the chairman of the House Financial Services is extremely sensitive about any legislation that can be viewed as expanding the role of the federal government in the regulation of insurance.   This blog takes the contrary view in that such a provision actually strengthens the home state regulator, but the politics are what they are.

With the arbitration provision stripped out, the main focus of the bill will be to allow RRGs to write commercial property coverage.  In anticipation of this expected development, several captive insurance leaders were polled to take their temperature on the relative importance of such a change to the LRRA.

The feedback was mixed evidenced by the sampling of responses as follows:

On The One Hand….

“I think ART as an industry needs as many tools as possible in the toolbox and any victory we can get, however small, is a step in the right direction.”

“I would like to see this pass because people keep thinking this only expands to commercial property – not so – it would allow auto physical damage.”

On the Other Hand….

“I’m of the opinion that RRGs time as a viable ART risk funding mechanism is waning.  I say this because of the NAIC’s accelerating aggressiveness in its attempt to impose governance standards on RRG domiciliary states equal to or greater than those imposed on traditional insurance companies.”

“Even with reinsurance backing the level of property risk undertaken by an RRG is not likely to create the beneficial impact for RRG members compared to the liability segment.”
So for an industry that can be apathetic when it comes to federal legislative/regulatory developments, even when everyone is in agreement, it will be interesting to see if any meaningful support materializes if/when LRRA legislation version 2.0 is introduced given differing opinions on the relative importance.

Given that the probability of a 3.0 version anytime in the foreseeable future is close to zero, get ready for the crossroads.



  1. Blog is very nice found some good stuff and good information here! it is very informative post. You must make sure that you get the best of dallas auto insurance plan today and always via reading a lot of reviews and comparing quotes over the web.

  2. I would be supportive on all of your articles and blogs because they are just upto the mark.
    Cheapest auto insurance quotes

  3. Thanks for talking about this web page, it is very useful for the company individual ads.

    Homeowners Insurance New York - U.S Insurance Agency has been providing services that are dependable, world-class, and extend well beyond the sale of an insurance policy

  4. This comment has been removed by the author.

  5. congratulations guys, quality information you have given!!!

  6. This blog post is really great; the standard stuff of the post is genuinely insurances

  7. I know this is quality based blogs along with other term life insurance rates

  8. I have been thinking about getting insurance in Ottawa. It's been something I've debated for a while. Recently I decided it may be for the best if I were to get it.
    John Bond |

  9. I like to spend my free time by reading various internet recourses. Today I came across your website and I located it is as one of the best free resources available! Well done! Keep on this quality! Cheap Homeowners insurance in Houston

  10. Thanks a lot for the practical critique. Me & my neighbors were just preparing to do some analysis about this. We got a grab a book from our local library however I think I learned more clear from this article. I am really glad to see such excellent information being shared freely available. customer service care

  11. Very nice article..Thanks for sharing this article.IASA conference

  12. Do your policy premiums accurately reflect your current assets and potential exposure, Come meet Solartis
    Vermont Captive Insurance Conference 2016

  13. is an online platform which is specially formed to provide knowledge and services to those individuals who want to take LIC policy or who are already policyholder.
    VIEW MORE:- lic bima shree maturity calculator