Association States its Concerns about Legislation that Provides a Small Number of RRGs the Opportunity to Write Property Coverage for Members While Containing Language that Might Prejudice Other Groups

LOS ANGELES, January 11, 2016 – The National Risk Retention Association (NRRA) announced today that the Association would oppose the Nonprofit Property Protection Act (HR 3794). The bill primarily seeks to amend the Liability Risk Retention Act of 1986 to expand the types of commercial insurance authorized for a very small number of risk retention groups serving certain nonprofit organizations.

NRRA is unable to support HR 3794 as it is currently written. The bill, which NRRA was given an opportunity to review after it was introduced, affords a very small number of RRGs an opportunity to provide property coverage to its members. This approach was actually determined to be potentially detrimental to a larger number of RRGs and Purchasing Groups, as their ability to provide other coverage would be compromised by an inserted definition of “commercial insurance.” It also provides a rationale for regulators hostile to the Liability Risk Retention Act (LRRA) to preclude Purchasing and Risk Retention Groups from providing contractual liability based coverage.

“NRRA certainly recognizes the importance of the addition of ‘property’ to the LRRA, and by no means are we against ‘nonprofits’” said Joe Deems, NRRA Executive Director. “But, with the very peculiar definition of ‘commercial insurance’ as set forth in the current legislation, such an addition would potentially hurt more members than it would help.”

While deliberating on this legislation, NRRA Board of Directors took into account two essential elements:
The inserted definition of “commercial insurance” incorporates language that inexplicably and unnecessarily includes an ambiguous description of “contractual liability” which has no relevance to a “property” bill.
The number of RRGs and PGs that actually produce contractual liability products and would be jeopardized by the suspect language exceeds the small number of “non-profits” that would benefit from the legislation. In other words, there are more members which might be potentially hurt than those to be helped and NRRA has to view the big picture.
“NRRA remains diligent in safeguarding against any initiatives that either do not support the majority of our members or the overall industry, or which might harm the business interests of even some of our members,” Deems said. “We look forward in the next Session of Congress to working with the bill’s sponsors and proponents in advance of the legislation’s introduction, to draft a bill of broader benefit to the Risk Retention and Purchasing community that will not prejudice the existing rights of these entities under the federal Liability Risk Retention Act.”