BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
WE WELCOME the Maryland Insurance Administration's willingness to review an earlier decision to assess a $1,000 fraud prevention fee on risk retention groups licensed in other states that want to do business in Maryland.
As we report on page 1, Steven Larsen, the new Maryland insurance commissioner, said he would decide as quickly as possible if the National Risk Retention Assn. is correct in arguing that the federal Risk Retention Act pre-empts such state fees.
Like risk retention group advocates, we believe the situation in Maryland is completely different from that in Louisiana. Louisiana, we believe, launched a frontal assault on risk retention groups with a law and application procedures so onerous they would have had the effect of driving groups out of the state. That law was struck down by federal courts.
In Maryland, we don't believe state insurance regulators intend to do any harm to risk retention groups. They have simply incorrectly extended a new law to risk retention groups, a decision they now-upon further evidence-are reviewing.
In our view, there is no doubt federal law pre-empts the Maryland fee. The law is explicit on what requirements a non-domiciliary state can impose on risk retention groups.
One of those requirements is that risk retention groups can be assessed premium taxes so long as those taxes are imposed on a non-discriminatory basis. Nowhere does the federal law say non-domiciliary states can impose fees on the groups. And clearly a fee is not a tax.
A $1,000 fee may seem at first blush a small deal and not worth disputing. But a far bigger issue is involved. If this fee isn't resisted, what is to prevent states from trying to impose more and more fees on risk retention groups? If such fees proliferated, it could become uneconomical for groups to write coverage in states where they have only a handful of policyholders.
It was not by accident that Congress so sharply restricted the authority of states-other than the state where a risk retention group is licensed-to regulate the groups.
When Congress enacted the Risk Retention Act in 1981 and later expanded it in 1986, it did so with one purpose: to give buyers a new funding alternative when coverage in the traditional market became unavailable, unaffordable or irrationally priced.
If that alternative-risk retention groups-is burdened with fees and other requirements that inflate overhead, risk retention groups will cease to be a cost-effective funding mechanism, and buyers would be left at the mercy of the traditional market.
The latest controversy in Maryland aside, we would hope that state insurance regulators, 16 years after the original Risk Retention Act was enacted, come to see the importance of risk retention groups.
While small in number-just 68 groups now are operating-they are an important part of the market. The fact that commercial insurers know buyers have an alternative if they unfairly or irrationally price policies is an important check on insurers.
Regulators, whose job it is to protect consumers, should not lose sight of that fact when they consider what rules to apply to risk retention groups.