The Independent Insurance Agents & Brokers of America (IIABA) has opposed the recently introduced US Nonprofit Property Protection Act.
The act, which was introduced by Representatives Dennis Ross and Ed Perlmutter, will broadly expand the scope of the Liability Risk Rentention Act, allowing many risk retention groups (RRGs) to offer all lines of commercial insurance.
Federal law currently only permits RRGs to offer commercial liability coverage, according to the IIABA.
Charles Symington, senior vice president of external and federal government affairs at the IIABA, commented: “While we have great respect for both Representatives Ross and Perlmutter, this is a classic case of a solution in search of a problem and we disagree with them on this issue.”
“The IIABA will oppose this unnecessary legislation that has the potential to harm consumers, not help them. Allowing RRGs to write nearly any form of commercial insurance coverage while retaining a weaker and preferential system of regulatory oversight will create an uneven playing field, distort the competitive balance within the insurance market, and, most importantly, place consumers at increased risk.”
According to the IIABA, RRGs are currently exempt from nearly all forms of regulatory oversight in any state outside of their domiciliary jurisdiction.
The IIABA also suggest that they are also less capitalised than traditional insurers, and they are not subject to important consumer protections such as mandatory participation in state guaranty funds.
Jen McPhillips, assistant vice president of federal government affairs at the IIABA, added: “The Risk Retention Act became law at a time when the country was facing a severe liability crisis.”
“Today, there is no marketplace need for this broad expansion which will needlessly leave consumers exposed without the protection of the state guaranty fund system, an important safety net.”
