11 March 2024news

NRRA bill to protect risk retention groups goes to the governor

Florida legislatures have approved a new draft bill following the failure of Senate Bill 516 last year. The new bill addresses the financing requirements of motor risk retention groups and amends section 324.021 of Florida’s Statutes.

It follows last year’s legislative session ending without the governor signing off the controversial 516  bill. That bill, the NRRA warned, could have a devastating impact on risk retention groups (RRGs). It would have required a minimum AM Best ‘A’ rating and capital surplus exceeding $100 million for companies insuring their commercial autos while competing against the sponsor in the market.

According to the NRRA, up to 95 per cent of RRGs in Florida failed to meet the requirement. The bill also breached federal law, the NRRA claimed.

The NRRA’s two proposed bills addressed both section 324.021, defining financial responsibility in the state, and section 627.944, defining foreign risk retention groups. While these did not in themselves violate federal law in the Liability Risk Retention Act, the NRRA said difficulties had arisen over the state’s definition of “authorised insurers”. Used in its insurance code to mean an insurer licensed and admitted in the state, it contrasts with the phrase used throughout Florida’s broader statutory provisions: “insurer authorized to do business in the state”.

The latter term also includes insurers not licensed in the state but otherwise authorized to do business in it (such as non-domiciliary surplus lines carriers and non-domiciliary or “foreign” RRGs). 

According to the NRRA, the difference had “been anecdotally used to thwart RRG operations in certain areas”. That will be prevented should the governor sign the proposed bill, which it is hopeful he will. 

The NRRA also welcomed the recent agreement by the state’s insurance commissioner to remove pop-up messages on the Florida Office of Insurance Regulation's website regarding RRGs.

Tim Sullivan, NRRA chair, said: “With more support to our campaign from all RRGs and other Industry leadership, we are hopeful to have yet another bill to present to the Florida Legislature next year, to continue with our initiatives.”

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