The Florida Senate Bill 516, which looked to change the definition of “motor vehicle liability policy”, and redefine the term “risk retention group (RRG)”, failed to be passed into US law this week.
While the Bill successfully came out of every committee — including final passage by the House of Representatives in recent weeks — the legislative session ended on 5 May, with no further action taken since.
As the bill continued to progress in the Florida State Senate throughout April, it received severe criticism from many, particularly the National Risk Retention Association (NRRA) who vowed to launch a pushback against it.
Commenting on the bill’s failure to be passed, the NRRA’s executive director Joseph Deems said: “We want to thank all of our dedicated members of NRRA for their positive contributions to our campaign so far.
“[However] do not assume that rigor mortis will be setting in anytime soon! This is no time for celebration, because discussion of the resurrection of the bill is already underway.”
Under the proposed bill, RRGs would need an A.M. Best ‘A’ rating to write any form of commercial auto liability in the state of Florida. RRGs would also be required to have a minimum of US$100 million in capital surplus. The NRRA said that the inclusion of both amendments would be “unconstitutional and discriminatory.”
Deems also announced that the association will continue to campaign against the bill and educate legislators about its “inherent flaws”. He affirmed that the association will “begin a vigorous campaign to educate regulators and legislators, regarding the obviously negative ‘spin’, suggesting financial unreliability, regarding RRGs”. Deems outlined that this “appears in the ubiquitous ‘pop-up’ that appears every time someone researches any RRG through the Florida Office of Insurance Regulation.”
He added: “We plan to begin immediate discussions with those entities and associations who have been detrimentally affected by the pop-up [...] to begin discussions on a suitable endeavor using means at our disposal to overcome the negative influence and express assertion that RRGs are not ‘authorised’ insurance companies in Florida.”
“This false notion is perpetuated by the common misconception that the word ‘authorised’ is improperly limited to mean companies which are ‘licensed and admitted’ in the [Florida] state.”
Deems goes on to say: “Of course RRGs remain licensed and admitted in their states of domicile.
“‘Authorisation’ is therefore automatic in all states under the federal Liability Risk Retention Act, which the majority of state and federal courts have upheld absolutely preempts the use of state laws to interfere with the ability of RRGs to operate in any non-domiciliary states.”
