§431K-1  Definitions.  As used in this

chapter:

     "Commissioner" means the insurance

commissioner of this State.

     "Completed operations liability"

means liability arising out of the installation, maintenance, or repair of any

product at a site which is not owned or controlled by any person who:

     (1)  Performs that work; or

     (2)  Hires an independent contractor to perform that

work; but shall include liability for activities which are completed or

abandoned before the date of the occurrence giving rise to the liability.

     "Domicile", for purposes of

determining the state in which a purchasing group is domiciled, means:

     (1)  For a corporation, the state in which the

purchasing group is incorporated; or

     (2)  For an unincorporated entity, the state of its

principal place of business.

     "Financially impaired" means that a

risk retention group:

     (1)  Has admitted assets that are less than the sum of

its aggregate liabilities and the amount of surplus to policyholders required

to be maintained by a risk retention group chartered in this State and

authorized to do the same kind or kinds of insurance; or

     (2)  Has admitted assets that are less than the sum of

its aggregate liabilities and outstanding capital stock; or

     (3)  Is insolvent.

     "Hazardous financial condition" means

that, based on its present or reasonably anticipated financial condition, a

risk retention group, although not yet financially impaired or insolvent, is

unlikely to be able to:

     (1)  Meet obligations to policyholders with respect to

known claims and reasonably anticipated claims; or

     (2)  Pay other obligations in the normal course of

business.

     "Insolvent" means that a risk

retention group has admitted assets that are less than the aggregate amount of

its liabilities.

     "Insurance" means primary insurance,

excess insurance, reinsurance, surplus lines insurance, and any other

arrangement for shifting and distributing risk which is determined to be

insurance under the laws of this State.

     "Liability" means legal liability for

damages, including costs of defense, legal costs and fees, and other claims

expenses because of injuries to other persons, damage to their property, or

other damage or loss to those other persons resulting from or arising out of:

     (1)  Any business, whether for profit or nonprofit,

trade, product, services, including professional services, premises, or

operations; or

     (2)  Any activity of any state or county government,

or any agency or political subdivision;

but does not include personal risk liability and an

employer's liability with respect to its employees other than legal liability

under the Federal Employers' Liability Act, 45 U.S.C. §51 et seq.

     "Personal risk liability" means

liability for damages because of injury to any person, damage to property, or

other loss or damage resulting from any personal, familial, or household

responsibilities or activities, rather than from responsibilities or activities

referred to in paragraphs (1) and (2) in the definition of

"liability".

     "Plan of operation" or

"feasibility study" means an analysis which presents the expected

activities and results of a risk retention group including, not less than the

following:

     (1)  The coverages, deductibles, coverage limits,

rates, and rating classification systems for each line of insurance the group

intends to offer;

     (2)  Historical and expected loss experience of the

proposed members and national experience of similar exposures to the extent

that this experience is reasonably available;

     (3)  Pro forma financial statements and projections;

     (4)  Appropriate opinions by a qualified, independent

casualty actuary, including a determination of minimum premiums or

participation levels required to commence operations and to prevent a hazardous

financial condition;

     (5)  Identification of management, underwriting

procedures, managerial oversight methods, investment policies;

     (6)  Identification of each state in which the risk

retention group has obtained, or sought to obtain, a charter and license, and a

description of its status in each state; and

     (7)  Other matters as may be prescribed by the

commissioner for liability insurance companies authorized by the insurance laws

of the state in which the risk retention group is chartered.

     "Product liability" means liability

for damages because of any personal injury, death, emotional harm,

consequential economic damage, or property damage, including damages resulting

from the loss of use of property, arising out of the manufacture, design,

importation, distribution, packaging, labeling, lease, or sale of a product,

but does not include the liability of any person for those damages if the

product involved was in the possession of the person when the incident giving

rise to the claim occurred.

     "Purchasing group" means any group

which:

     (1)  Has as one of its purposes the purchase of liability

insurance on a group basis;

     (2)  Purchases this insurance only for its group

members and only to cover their similar or related liability exposure, as

described in [paragraph (3)];

     (3)  Is composed of members whose businesses or

activities are similar or related with respect to the liability to which

members are exposed by virtue of any related, similar, or common business,

trade, product, services, premises, or operations; and

     (4)  Is domiciled in any state.

     "Risk retention group" means any

corporation or other limited liability association formed under the laws of any

state, Bermuda, or the Cayman Islands:

     (1)  Whose primary activity consists of assuming and

spreading all, or any portion, of the liability exposure of its group members;

     (2)  Which is organized for the primary purpose of

conducting the activity described under paragraph (1);

     (3)  Which:

         (A)  Is chartered and licensed as a liability

insurance company and authorized to engage in the business of insurance under

the laws of any state; or

         (B)  Before January 1, 1985, was chartered or

licensed and authorized to engage in the business of insurance under the laws

of Bermuda or the Cayman Islands and, before this date, had certified to the

insurance commissioner of at least one state that it satisfied the

capitalization requirements of that state, except that any group shall be

considered to be a risk retention group only if the group has been engaged in

business continuously since this date and only for the purpose of continuing to

provide insurance to cover product liability or completed operations liability,

as defined in the Product Liability Risk Retention Act of 1981, 15 U.S.C. §3901

et seq., before the date of the enactment of the Liability Risk Retention Act

of 1986, P.L. 99-563;

     (4)  Which does not exclude any person from membership

in the group solely to provide for members of the group a competitive advantage

over the person;

     (5)  Which has as its:

         (A)  Members only persons who have an ownership

interest in the group and that has as its owners only persons who are members

who are provided insurance by the risk retention group; or

         (B)  Sole member and sole owner an organization

that is owned by persons who are provided insurance by the risk retention

group;

     (6)  Whose members are engaged in business or

activities similar or related to the liability of which these members are

exposed by virtue of any related, similar, or common business trade, product,

services, premises, or operations;

     (7)  Whose activities do not include the provision of

insurance other than:

         (A)  Liability insurance for assuming and

spreading all or any portion of the liability for its group members; and

         (B)  Reinsurance with respect to the liability

of any other risk retention group, or any members of another group, which is

engaged in businesses or activities so that this group or member meets the

requirement described in paragraph (6) for membership in the risk retention

group that provides this reinsurance; and

     (8)  The name of which includes the phrase "risk

retention group".

     "State" means any state of the United

States or the District of Columbia. [L 1987, c 180, pt of §1; am L 1989, c 272,

§§2, 3; am L 1997, c 368, §8; am L 2004, c 122, §80]