TITLE 27
Insurance
CHAPTER 27-46
Risk Retention Act
SECTION 27-46-2
§ 27-46-2 Definitions.
As used in this chapter:
(1) "Commissioner" means the director of the department of
business regulation or the commissioner, director, or superintendent of
insurance in any other state;
(2) "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:
(i) Any person who performs that work; or
(ii) Any person who 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;
(3) "Domicile", for the purposes of determining the state in
which a purchasing group is domiciled, means:
(i) For a corporation, the state in which the purchasing
group is incorporated; and
(ii) For an unincorporated entity, the state of its principal
place of business;
(4) "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:
(i) To meet obligations to policyholders with respect to
known claims and reasonably anticipated claims; or
(ii) To pay other obligations in the normal course of
business;
(5) "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;
(6) "Liability":
(i) 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 other
persons resulting from or arising out of:
(A) Any business whether profit or nonprofit, trade, product,
services including professional services, premises, or operations; or
(B) Any activity of any state or local government, or any
agency or political subdivision of any state or local government; and
(ii) Does not include personal risk liability and an
employer's liability with respect to its employees other than legal liability
under 45 U.S.C. § 51 et seq.;
(7) "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
subdivision (6) of this section;
(8) "Plan of operation or a feasibility study" means an
analysis which presents the expected activities and results of a risk retention
group including, at a minimum:
(i) Information sufficient to verify that its members are
engaged in businesses or activities similar or related with respect to the
liability to which the members are exposed by virtue of any related, similar,
or common business, trade, product, services, premises or operations;
(ii) For each state in which it intends to operate, the
coverages, deductibles, coverage limits, rates, and rating classification
systems for each line of insurance the group intends to offer;
(iii) Historical and expected loss experience of the proposed
members and national experience of similar exposures to the extent that this
experience is reasonably available;
(iv) Pro forma financial statements and projections;
(v) Appropriate opinions by a qualified, independent casualty
actuary, including a determination of minimum premium or participation levels
required to commence operations and to prevent a hazardous financial condition;
(vi) Identification of management, underwriting, and claims
procedures, marketing methods, managerial oversight methods, investment
policies, and reinsurance agreements;
(vii) 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
(viii) Any other matters that may be prescribed by the
commissioner of the state in which the risk retention group is chartered for
liability insurance companies authorized by the insurance laws of that state;
(9) "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 manufacturer, 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;
(10) "Purchasing group" means any group which:
(i) Has as one of its purposes the purchase of liability
insurance on a group basis;
(ii) Purchases the insurance only for its group members and
only to cover their similar or related liability exposure, as described in
subdivision (10)(iii);
(iii) Is composed of members whose business 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
(iv) Is domiciled in any state;
(11) "Risk retention group" means any corporation or other
limited liability association:
(i) Whose primary activity consists of assuming and spreading
all, or any portion, of the liability exposure of its group members;
(ii) Which is organized for the primary purpose of conducting
the activity described under paragraph (i) of this subdivision;
(iii) 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 that date, had certified to the insurance
commissioner of at least one state that it satisfied the capitalization
requirements of that state, except that the group shall be considered to be a
risk retention group only if it has been engaged in business continuously since
that date and only for the purpose of continuing to provide insurance to cover
product liability or completed operations liability, as the terms were defined
in the Product Liability Risk Retention Act of 1981 before the date of the
enactment of the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 et
seq.;
(iv) That does not exclude any person from membership in the
group solely to provide for members of the group a competitive advantage over
the person;
(v) Which:
(A) Has as its owners only persons who comprise the
membership of the risk retention group and who are provided insurance by the
group; or
(B) Has as its sole owner an organization which has as:
(I) Its members only persons who comprise the membership of
the risk retention group; and
(II) Its owners only persons who comprise the membership of
the risk retention group and who are provided insurance by the group;
(vi) Whose members are engaged in businesses or activities
similar or related with respect to the liability of which the members are
exposed by virtue of any related, similar, or common business trade, product,
services, premises or operations;
(vii) 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 of its group members; and
(B) Reinsurance with respect to the liability of any other
risk retention group or any members of the other group which is engaged in
business or activities so that the group or member meets the requirement
described in subdivision (vi) from membership in the risk retention group which
provides the reinsurance; and
(viii) The name of which includes the phrase "risk retention
group"; and
(12) "State" means any state of the United States or the
District of Columbia.
History of Section.
(P.L. 1991, ch. 348, § 1.)
