TITLE 27

Insurance

CHAPTER 27-46

Risk Retention Act

SECTION 27-46-4



   § 27-46-4  Risk retention groups not

chartered in this state. –

Risk retention groups chartered and licensed in states other than this state

and seeking to do business as a risk retention group in this state shall comply

with the laws of this state as follows:



   (1) Notice of operations and designation of commissioner

as agent.



   (i) Before offering insurance in this state, a risk retention

group shall submit to the commissioner:



   (A) A statement identifying the state or states in which the

risk retention group is chartered and licensed as a liability insurance

company, charter date, its principal place of business, and any other

information, including information on its membership, that the commissioner of

this state may require to verify that the risk retention group is qualified

under § 27-46-2(11);



   (B) A copy of its plan of operations or feasibility study and

revisions of the plan or study submitted to the state in which the risk

retention group is chartered and licensed; provided, that the provision

relating to the submission of a plan of operation or feasibility study shall

not apply with respect to any line or classification of liability insurance

which:



   (I) Was defined in § 15 U.S.C. 3901 et seq. before

October 27, 1986; and



   (II) Was offered before that date by any risk retention group

that had been chartered and operating for not less than three (3) years before

that date;



   (ii) The risk retention group shall submit a copy of any

revision to its plan of operation or feasibility study required by §

27-46-3(b) at the same time that the revisions is submitted to the commissioner

of its chartering state; and



   (iii) The risk retention group shall submit a statement of

registration that designates the commissioner as its agent for the purpose of

receiving service of legal documents or process;



   (2) Financial condition. Any risk retention group

doing business in this state shall submit to the commissioner:



   (i) A copy of the group's financial statement submitted

annually to the state in which the risk retention group is chartered and

licensed which shall be certified by an independent public accountant and

contain a statement of opinion on loss and loss adjustment expense reserves

made by a member of the American Academy of Actuaries or a qualified loss

reserve specialist, under criteria established by the National Association of

Insurance Commissioners;



   (ii) A copy of each examination of the risk retention group

as certified by the commissioner or public official conducting the examination;



   (iii) Upon request by the commissioner, a copy of any

information or document pertaining to any outside audit performed with respect

to the risk retention group; and



   (iv) Any information that may be required to verify its

continuing qualification as a risk retention group under § 27-46-2(11);



   (3) Taxation.



   (i) Each risk retention group shall be liable for the payment

of premium taxes and taxes on premiums of direct business for risks resident or

located within this state, and shall report to the commissioner the net

premiums written for risks resident or located within this state. The risk

retention group shall be subject to taxation, and any applicable fines and

penalties related to taxation, on the same basis as a foreign admitted insurer;



   (ii) To the extent licensed agents or brokers or insurance

producers are utilized pursuant to § 27-46-12, they shall report to the

commissioner the premiums for direct business for risks resident or located

within this state which those licensees have placed with or on behalf of a risk

retention group not chartered in this state;



   (iii) To the extent that insurance agents or brokers or

producers are utilized pursuant to § 27-46-12, the agent or broker or

insurance producers shall keep a complete and separate record of all policies

procured from each risk retention group, which record shall be open to

examination by the commissioner. The total cost of the examinations shall be

paid for in the same manner as set forth in § 27-13-1. These records

shall, for each policy and each kind of insurance provided under them, include

the following:



   (A) The limit of liability;



   (B) The time period covered;



   (C) The effective date;



   (D) The name of the risk retention group which issued the

policy;



   (E) The gross premium charged; and



   (F) The amount of return premiums, if any;



   (4) Adherence to fair claims settlement practices. Any

risk retention group, its agents, and representatives shall comply with any law

or regulations regarding claims settlement practices;



   (5) Deceptive, false, or fraudulent practices. Any

risk retention group shall comply with and be subject to the laws of this state

regarding deceptive, false, or fraudulent acts or practices;



   (6) Examination regarding financial condition. Any

risk retention group must submit to an examination by the commissioner to

determine its financial condition if the commissioner of the jurisdiction in

which the group is chartered and licensed has not initiated an examination or

does not initiate an examination within sixty (60) days after a request by the

commissioner of this state. Any examination shall be coordinated to avoid

unjustified repetition and conducted in an expeditious matter and in accordance

with the NAIC's examiner handbook. The total cost of the examination shall be

paid for in the same manner as set forth in § 27-13-1;



   (7) Notice of purchasers. Every application form for

insurance from a risk retention group, and every policy, on its front and

declaration pages, issued by a risk retention group, shall contain in ten (10)

point type the following notice:



   NOTICE

   THIS POLICY IS ISSUED BY YOUR RISK RETENTION GROUP. YOUR RISK

RETENTION GROUP MAY NOT BE SUBJECT TO ALL OF THE INSURANCE LAWS AND REGULATIONS

OF YOUR STATE. STATE INSURANCE INSOLVENCY GUARANTY FUNDS ARE NOT AVAILABLE FOR

YOUR RISK RETENTION GROUP.



   (8) Prohibited acts regarding solicitation or sale.

The following acts by a risk retention group are prohibited:



   (i) The solicitation or sale of insurance by a risk retention

group to any person who is not eligible for membership in the group; and



   (ii) The solicitation or sale of insurance, by, or operation

of, a risk retention group that is in hazardous financial condition or

financially impaired;



   (9) Prohibition on ownership by an insurance company.

No risk retention group shall be allowed to do business in this state if an

insurance company is directly or indirectly a member or owner of the risk

retention group, other than in the case of a risk retention group all of whose

members are insurance companies;



   (10) Prohibited coverage. The terms of any insurance

policy issued by any risk retention group shall not provide, or be construed to

provide, coverage prohibited generally by statute of this state or declared

unlawful by the highest court of this state whose law applies to the policy;



   (11) Delinquency proceedings. A risk retention group

not chartered in this state and doing business in this state shall comply with

a lawful order issued in a voluntary dissolution proceeding or in a delinquency

or liquidation proceeding commenced by the state insurance commissioner if

there has been a finding of financial impairment after an examination under

subdivision (6) of this section; and



   (12) Penalties. A risk retention group that violates

any provision of this chapter will be subject to fines and penalties including

revocation of its right to do business in this state, applicable to licensed

insurers generally.



History of Section.

(P.L. 1991, ch. 348, § 1; P.L. 1993, ch. 180, § 29; P.L. 1996, ch.

188, § 17; P.L. 2002, ch. 292, § 88.)