17 April 2013Law & regulation

Nevada court decides in favour of risk retention group

A court of appeals has affirmed a District Court ruling that the State of Nevada cannot deny a risk retention group the right to do business in the State, ending a dispute that began in 2010 when the Alliance of Non-Profits for Insurance Risk Retention Group was ordered by the Nevada Commissioner of Insurance to cease writing auto liability insurance in the State because it was not an authorized insurer under state law. The court held that under federal law the group cannot be denied the right to do business in the State.

The three-judge Circuit Court decision stated that: “The Liability Risk Retention Act (LRRA) broadly pre-empts any State law, rule, regulation or order to the extent that such law, rule, regulation or order would… make unlawful, or regulate, directly or indirectly the operation of a risk retention group.”

Joseph Deems, executive director of the National Risk Retention Association, hailed the decision as a victory and said: “as in other cases where States have attempted to impose requirements on RRGs that violate federal law exempting them from the most regulation outside their homes State, the Ninth Circuit issued an unqualified opinion upholding the pre-emption provisions of the LRRA of 1986.”