The source. This defectively drafted bill is ironically being sponsored by a risk retention group (RRG) for construction contractors which already has an A.M. Best “A” rating with its own capital surplus exceeding $100 Million dollars.  The Bill seeks to establish the identical criteria of an A.M. Best “A” rating plus a minimum of $100 Million in capital surplus for any companies insuring their commercial autos while competing against the sponsor in the market. 

How to get a monopoly going in Florida? 90-95% of all RRGs in Florida do not have or need such ratings. They are not required by law to possess such ratings or capital surplus, and frankly do not want to have such ratings which are expensive to maintain and will interfere with their ability to conduct their local small businesses. 

This crisis is going to be global. This bill actually creates a monopoly that simultaneously promotes unrestrained discrimination by overzealous regulators, and discourages competition!  It will drive prices up across the board, increasing even the costs of goods and services. It will be welcomed by agents, brokers and the traditional carriers who will be able eliminate competitors who succeed in keeping costs down.

Let’s create a SOLUTION IN SEARCH OF A PROBLEM…. In everyday experience, a solution in search of a problem becomes the motherhood of the problem! Facts are just such difficult things. This could not be more true than our present circumstances. It is very important to note that thousands of RRG member insureds have been completely able to insure their “commercial auto” for literally years with no push-back from the Office of Insurance Regulation (OIR).  Of course for traditionally obvious reasons, no states, including Florida, impose any rating or minimum surplus requirements upon any RRGs, traditional or surplus lines carriers – anywhere. 

Adding Insult to Injury. The motivation for this Bill allegedly was so the sponsoring RRG here could save a total of only seven (7) of its contractor members from having to buy “fronting” coverage (at $25,000 apiece = a total of $175,000) so they can use their commercial auto coverage to service construction jobs and thereby avoid the prejudicial advertising put out by the OIR suggesting that RRGs are somehow financially unsound.  

Legislators in favor of the Bill have inconsistently stated, naturally with virtually no logical or factual bases therefor, that they are doing this “to increase ‘competition.’” (What!?) Or, that RRGs are somehow “unregulated.” (What!?) Or, to somehow assist the regulators to overcome their alleged inability to test the financial solvency of RRGs to pay their claims obligations (notwithstanding Florida’s law itself [see FS § 627.944(6)] which tells the OIR exactly how to do this. What!?) The level of ignorance about RRGs exists in epidemic proportions here.     

The newest amendment is actually now worse than the original bill, which was fatally flawed to begin with!  It’s incredibly ambiguous and misleading language can and will be used by the Insurance Commissioner (and other agencies) to arbitrarily prohibit a majority of small businesses insured by RRGs from offering coverage in the state. Despite forty (40+) letters from our office to every legislator sitting on every committee thus far, no one still understands that the LRRA was specifically designed by the Congress thirty-seven (37) years ago to specifically prevent any insurance department in a non-domiciliary state like Florida from arbitrarily refusing to allow RRGs to provide their coverage(s) in those states.

House Now Passes the Bill. The Florida Senate Rules Committee adopted the Bill on April 24, 2023. The House Special Order Calendar hearing on the above Bill(s) then took place on Tuesday April 25, 2023 in the Capitol, with its “third” reading on Wednesday, passing the Bill before the House. Both House meetings predictably resulted in voting strictly along party lines with Republicans voting unanimously in favor and the Democrats voting against. 

NRRA, as always, takes the high road. Executive Director Deems attended multiple hearings this week. Deems came to Tallahassee specifically to calmly articulate NRRA’s case at the Rules Committee meeting in opposition to the bill. State Representative Hillary Cassel, a freshman Democrat from District 101, led the charge at the Special Order Calendar (bill reading and debate where interested parties were not allowed to testify) and again at the Third Reading session on April 26th  where the Bill passed.

Paul Handerhan President of the Federal Association for Insurance Reform (FAIR), continued to appear this week and also voiced FAIR’s opposition to the Bill. 

NRRA also wrote to Senator DiCeglie (Senate bill sponsor) on April 20, 2023 and by continuing to attempt to offer an amendment with the Bill’s RRG sponsor. Our offers were not accepted.

Following all of the above, the association is continuing its preparation for our “ground” campaign and needs your help.

Why Florida Bill 516 matters for all RRGs and how you can help.

If passed, Florida Bill 516 will have a devastating impact on not only trucking and transportation risk retention groups registered in Florida immediately, but potentially every RRG writing commercial liability, including auto. This could also arguably impact 96% of the RRGs registered in Florida. Hundreds, if not thousands, of RRG owner-member-insureds could lose their coverage. The Bill’s passing may also open the door to other significant potential threats to risk retention groups in other states and for other types of risk retention group entities.

SB 516 unquestionably remains in violation of the federal law – It is unconstitutional. By imposing the requirement of an A.M. Best “A” rating and a minimum financial size status of $100M (in capital surplus) in order for an RRG to write any form of commercial auto liability in Florida, the Bill unlawfully A) seeks to regulate risk retention groups, and B) discriminates against risk retention groups that do not have to or cannot obtain such ratings. Both are categorically preempted by the Federal Liability Risk Retention Act, as NRRA has helped establish in numerous legal decisions in recent years.

If Florida can get away with violating the federal law specifically designed to prevent states from interfering with RRGs, and/or by making any financial rating a requirement to do business in their state, it may set a precedent to make other states bolder to do the same thing.  We need to stop this bill before it passes because, if it passes, suing the state will take years and will be too late to help these impacted RRGs.

Details on NRRA’s Fundraising and Friend-raising Campaign: 

How You Can Help NRRA Oppose Bill 516.

NRRA Executive Director, Joe Deems, announced last week that the Association has developed a platform for financial support based on three (3) phases of ongoing activity:

  • Phase One – Presently ongoing campaign to communicate with and educate legislators as to the inherent flaws in the bill – i.e., while our interest and those of the proponents are actually not inconsistent, their language will be self-defeating, while ours will not be. The purpose will be to persuade an “amendment” to the Bill that will work.  Estimated cost at this point: $12,000.00 (including staff travel.)
  • Phase Two – Now that the Amendments are adopted, an ongoing campaign to develop favorable understanding of the issues with the governor’s office and multiple state agencies impacting the need for liability insurance from RRGs, i.e., OIR, Dept. of Highway Safety and Motor Vehicles; Business and Professional Regulation, etc. Estimated cost will be in the range of $75,000.00 – $90,000.00.
  • Phase Three – If all else fails and (when) the bill passes with the current damaging language, to commence litigation to enjoin enforcement of the bill and challenge it under the federal law preempting such activity under the LRRA.  Estimated Cost would be $150,000.00 to file and pursue the case in federal court, not necessarily to include appellate review at the federal 11th Circuit level, and potentially before the Supreme Court.

Fundraising will therefore take place in these three tiers, based on development and success of each of the preceding tiers.

We would ask that all interested, or potentially impacted members please make immediate arrangements to assist NRRA in its continued opposition effort to this bill by contacting our offices as reflected below

How much money you have does not make you a safer company!”

More on Florida Bill 516

For more information, read a summary and analysis of Florida Bill 516 by the Risk Retention Reporter. 


For inquiries, contact: Joseph E. Deems, NRRA Executive Director

16133 Ventura Blvd., Suite 1055, Encino, CA 91436, U.S.A.

(818) 995-3274 |