NRRA’s support of risk retention groups and their right to provide general liability insurance for owner-insureds once again paid dividends.

The United States Court of Appeals for the Seventh Circuit vacated and remanded Restoration Risk Retention Group, Inc. v. Ross, D.S.P.S., et al., sending it back to the District (trial) Court for the Western District of Wisconsin on January 12.  NRRA had filed an amicus curiae (“friend of the court”) brief on behalf of Restoration RRG, which offers general liability insurance for franchise owners of Servpro Industries, Inc. Servpro provides cleaning and damage remediation services caused by fire, natural disasters, floods, and other mishaps.

The case arises out of a refusal by the Wisconsin Department of Safety and Professional Services (DSPS) to issue a business license to a Servpro franchisee on the pretext that it was not insured by a carrier “authorized” to write policies in that State.

“This is a win,” National Risk Retention Association (NRRA) Board Chair Mike Schroeder said. “The trial court’s decision to not recognize the rights of Restoration RRG was reversed. The appellate court sent it back to the trial court with instructions to start over and consider our contentions.”

Work remains, however, according to NRRA Vice Chair, Jon Harkavy.  The right of RRGs to do business under the Federal Liability Risk Retention Act remains imperiled by state overreach. One reason for the ability for states to discriminate in Wisconsin against RRGs is the faulty Ophthalmic Mutual Insurance Company, Inc. RRG vs. Musser (OMIC) decision. The Restoration RRG decision neither clarifies nor distinguishes the OMIC decision and the ruling by the Seventh Circuit, while positive, might make Wisconsin able to discriminate against RRGs by forcing them to qualify under the “surplus lines” rules.   

“It was a victory for Restoration because the case was remanded back to the trial court with instructions that the trial court was wrong in not allowing RRG to get injunctive relief,” Schroeder said. “Nevertheless, the Seventh Circuit failed to address or at least distinguish the defective OMIC decision.“

“Restoration RRG can be registered in any state beyond its state of domicile with minimal state regulation. Trying to define an authorized carrier as only one that is licensed and admitted is wrong. The LRRA allows RRGs to operate inside any state.”