JLT Towner Insurance Management and the Vermont Captive Insurance Association have praised the proposed expansion of the Liability Risk Retention Act to allow certain risk retention groups (RRGs) to insure policyholders’ property risk.
The US Nonprofit Property Protection Act, which was introduced by Representatives Dennis Ross and Ed Perlmutter, will broadly expand the scope of the Liability Risk Rentention Act, allowing many RRGs to offer all lines of commercial insurance.
JLT Towner Insurance Management partner Len Crouse commented: “This bill gives the industry a foot in the door. All of our RRG clients have property exposure, so eventual passage of this bill would be a positive development for them.”
In a statement issued to VCIA members, president Richard Smith explained: “The bill is a more limited extension to the LRRA in an attempt to move the property addition forward without raising opposition, which has stymied these efforts in the past.”
“Specially, the measure would allow RRGs to write property coverages for policyholders that are non-profit organisations with tax-exempt status or educational institutions and educational-related institutions that are non-profit or government entities.”
He added: “While VCIA continues to back the addition of property coverage for all RRGs, we think this is a necessary first step to move the issue forward.”
The bill would apply to RRGs serving non-profit and educational organisations that have been in existence for at least 10 years and maintain capital and surplus of at least $10 million.
It would also allow property coverage up to any individual policyholder’s total insured value of $50 million.
JLT Towner Insurance Management senior account manager Dustin Partlow added: “Our hope is that this bill is only the start, and legislators will strengthen the law and add other eligible insurance coverages each year.”
The Independent Insurance Agents & Brokers of America (IIABA) has publically opposed the proposed expansion, with Charles Symington, senior vice president of external and federal government affairs, arguing that new bill is a classic case of a solution in search of a problem. He added: “We disagree with them on this issue.”
Jen McPhillips, assistant vice president of federal government affairs at the IIABA, added: “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.”
