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Lawmakers seek GAO review of out-of-state RRG regulation

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WASHINGTON—Several federal legislators are asking the Government Accountability Office to study regulation of risk retention groups by states in which the groups operate but are not licensed.

The lawmakers want the GAO to examine whether so-called nondomiciliary states are attempting to regulate RRGs directly or indirectly through, among other things, filing requirements, fees and waiting periods before the groups can operate, according to Reps. Dennis Moore, D-Kan.; Suzanne Kosmas, D-Fla.; and John Campbell, R-Calif.

In addition, the three representatives asked in a letter sent to the GAO Thursday for the office to examine whether there are legislative solutions to “underscore the foundation” of the Liability Risk Retention Act, which narrow limits the ability of nondomiciliary states to interfere with RRGs.

RRG and self-insurance trade associations, which have long asserted that states have improperly interfered with RRGs that are licensed outside their borders, welcomed the study.

“The imposition of filing fees, filing requirements, information requests, waiting periods and other duties not authorized by the LRRA are a continuing problem for the RRG industry,” Robert Myers, general counsel for the National Risk Retention Assn. and a partner with Morris, Manning and Martin L.L.P. in Washington, said in a statement.

“The GAO study will be a great step toward quantifying the problem and hopefully providing the basis for needed congressional oversight,” Mr. Myers added.

The Self Insurance Institute of America “applauded” the legislators' request for a GAO study to investigate state “abuses” of RRGs.

There currently are about 250 RRGs, which were authorized under measures Congress passed in 1981 and 1986, according to the Risk Retention Reporter, a Pasadena, Calif.-based newsletter that tracks the industry.

Risk retention groups, which are specialized multiple-owner captive insurance companies, can directly write all commercial casualty coverage—except workers compensation—for policyholder owners.