The purpose of this chapter is
to regulate the formation and operation in this state of organizations
formed pursuant to the provisions of the Liability Risk Retention Act of
1986.
(Added to NRS by 1987, 1327)
As used in this chapter, the words and
terms defined in NRS 695E.030 to
695E.110 , inclusive, have the
meanings ascribed to them in those sections.
(Added to NRS by 1987, 1327)
1. “Completed operations liability” means liability arising out of
the installation, maintenance or repair of any product at a site that is
not owned or controlled by:
(a) Any person who performs the work; or
(b) Any person who hires an independent contractor to perform the
work.
2. The term includes liability for activities that are completed
or abandoned before the occurrence giving rise to the liability.
(Added to NRS by 1987, 1328)
“Domicile” means:
1. For a corporation, the state in which it is incorporated; and
2. For any other person, the state of his principal place of
business.
(Added to NRS by 1987, 1328)
“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.
(Added to NRS by 1987, 1328)
1. “Liability” means legal liability for damages, including costs
of defense, legal costs and fees, and other expenses for claims, because
of injuries to other persons, damage to their property, or other damage
or loss to those persons resulting from or arising out of any:
(a) Business, whether or not conducted for profit, or any trade,
product, services, whether or not professional, or any premises or
operations; or
(b) Activity of any state or local government, or any agency or
political subdivision thereof.
2. The term does not include personal risk liability and an
employer’s liability concerning its employees, other than legal liability
under the Federal Employers’ Liability Act.
(Added to NRS by 1987, 1328)
“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.
(Added to NRS by 1987, 1328)
“Plan of operation”
means an analysis of the expected activities and results of a risk
retention group, including:
1. The coverages, deductibles, limits of coverage, rates and
systems of rating classification 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 premium or participation
levels required to commence operations and to prevent a hazardous
financial condition;
5. Identification of management, underwriting procedures, policies
for investment and methods for managerial oversight; and
6. Such other matters as are prescribed by the Commissioner for
liability insurers authorized by the insurance laws of the state in which
the risk retention group is chartered.
(Added to NRS by 1987, 1328)
“Product liability”
means liability for damages because of any personal injury, death,
emotional harm, consequential economic damage or damage to property,
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 that person when the incident giving rise to the claim
occurred.
(Added to NRS by 1987, 1329)
“Purchasing group” means
any group which:
1. Has as one of its purposes the purchase of liability insurance
on a group basis;
2. Purchases such insurance only for its members and only to cover
their similar or related exposure to liability, as described in
subsection 3;
3. Is composed of members whose businesses or activities are
similar or related with respect to the liability to which they are
exposed by virtue of any related, similar or common business, trade,
product, services, premises or operations; and
4. Is domiciled in any state.
(Added to NRS by 1987, 1329)
“Risk retention
group” means any corporation or association with limited liability that
is 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 exposure of its members to liability;
2. Which is organized primarily to conduct the activity described
in subsection 1;
3. Which:
(a) Is chartered and licensed as a liability insurer and authorized
to transact insurance under the laws of any state; or
(b) Before January 1, 1985, was chartered or licensed and
authorized to transact insurance under the laws of Bermuda or the Cayman
Islands and, before that date, had certified to the Commissioner of
Insurance of at least one state that it satisfied the state’s
requirements for capitalization, except that such a group is 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;
4. Which does not exclude any person from membership in the group
solely to provide for members of the group a competitive advantage over
an excluded person;
5. Which has as its:
(a) Members only persons who have an ownership interest in the
group and who are provided insurance by the risk retention group; or
(b) Sole owner an organization which has as its:
(1) Members only persons who comprise the membership of the
risk retention group; and
(2) Owners only persons who comprise the membership of the
risk retention group and who are provided insurance by the group;
6. Whose members are engaged in businesses or activities similar
or related with respect to the liability to which they 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 of the members of the group; and
(b) Reinsurance with respect to the liability of any other risk
retention group, or any member of such a group, that is engaged in a
business or activity such that the other group or member meets the
requirements of subsection 6 for membership in the risk retention group
that provides reinsurance; and
8. The name of which includes the phrase “risk retention group.”
(Added to NRS by 1987, 1329; A 1995, 1780)
PURCHASING GROUPS
A purchasing group that intends to
conduct business in this state shall register with the Commissioner and:
1. Furnish notice to the Commissioner that:
(a) Identifies the state in which the group is domiciled;
(b) Specifies the lines and classifications of liability insurance
that the purchasing group intends to purchase;
(c) Identifies the insurer from which the group intends to purchase
its insurance and the domicile of the insurer;
(d) Identifies the principal place of business of the group;
(e) Identifies all other states in which the group intends to do
business; and
(f) Provides such other information as the Commissioner requires to
verify and determine:
(1) Its qualification as a purchasing group;
(2) Where the purchasing group is located; and
(3) The appropriate tax treatment of the purchasing group;
and
2. Appoint the Commissioner as its agent solely to receive service
of legal process, and pay the fee for filing a power of attorney required
by subsection 4 of NRS 680B.010 ,
except that this subsection does not apply to a purchasing group that:
(a) Was domiciled before April 1, 1986, and on and after October
27, 1986, in any state;
(b) Before and after October 27, 1986, purchased its insurance from
an insurer licensed in any state;
(c) Was a purchasing group under the requirements of the Product
Liability Risk Retention Act of 1981 before October 27, 1986; and
(d) Does not purchase insurance that was not authorized for an
exemption under that act, as in effect before October 27, 1986.
(Added to NRS by 1987, 1330; A 1995, 1781)
A purchasing group shall notify the Commissioner of any
change in any of the information required pursuant to subsection 1 of NRS
695E.120 , within 10 days after the
information ceases to be accurate.
(Added to NRS by 1995, 1780)
1. Except as otherwise provided in chapter 685A of NRS, a purchasing group shall not purchase
insurance from an unauthorized insurer or a risk retention group that is
not chartered or registered in this state.
2. A purchasing group is exempt from any law of this state that
relates to the formation or prohibition of groups for the purchase of
insurance, and any law that would discriminate against a purchasing group
or its members.
3. An insurer is exempt from any law of this state that prohibits
providing, or offering to provide, to a purchasing group or its members
advantages based on their loss and expense experiences not afforded to
other persons with respect to rates, policy forms, coverages or other
matters.
4. A purchasing group and its insurer are exempt from any law of
this state which requires that an insurance policy issued to a purchasing
group or any of its members be countersigned by an insurance agent
residing in this state.
5. A purchasing group that obtains liability insurance from a
surplus lines insurer or a risk retention group shall inform each of the
members of the purchasing group which have a risk resident or located in
this state that the risk is not protected by an insurance insolvency
guaranty fund in this state, and that the risk retention group or insurer
may not be subject to all insurance laws and regulations of this state.
6. No purchasing group may purchase insurance providing for a
deductible or self-insured retention applicable to the group as a whole,
but the coverage may provide for a deductible or self-insured retention
applicable to individual members of the group.
7. Purchases of insurance by purchasing groups are subject to the
same standards regarding aggregate limits which are applicable to all
purchases of group insurance.
(Added to NRS by 1987, 1330; A 1995, 1782)
All
premiums paid by a purchasing group or any member of the purchasing group
for insurance on risks resident, located or to be performed in this state
are subject to the payment of premium taxes and any related fines or
penalties pursuant to chapters 680A , 680B
and 685A of
NRS. To the extent that premiums are paid by a purchasing group or any
member of the purchasing group:
1. To an authorized insurer, the insurer shall pay the premium
taxes and any related fines or penalties pursuant to chapters 680A and 680B of NRS;
2. To a surplus lines broker for insurance procured as surplus
lines coverage, the surplus lines broker shall pay the premium taxes and
any related fines or penalties pursuant to chapter 685A of NRS; or
3. To an unauthorized insurer for insurance independently procured
by the purchasing group or any member of the group, premium taxes and any
related fines and penalties are payable first by the purchasing group,
and if not paid by the purchasing group, then by each of its members,
pursuant to NRS 680B.040 .
(Added to NRS by 1995, 1780)
RISK RETENTION GROUPS
1. A risk retention group seeking to be chartered in this State
must obtain a certificate of authority pursuant to chapter 694C of NRS to transact liability insurance and, except
as otherwise provided in this chapter, must comply with:
(a) All of the laws, regulations and requirements applicable to
liability insurers in this State; and
(b) The provisions of NRS 695E.150 to 695E.210 , inclusive, to the extent that those
provisions do not limit or conflict with the provisions with which the
group is required to comply pursuant to paragraph (a).
2. Before it may transact insurance in any state, the risk
retention group must submit to the Commissioner for his approval a plan
of operation. The risk retention group shall submit an appropriate
revision in the event of any subsequent material change in any item of
the plan of operation within 10 days after the change. The group shall
not offer any additional kinds of liability insurance, in this State or
in any other state, until a revision of the plan is approved by the
Commissioner.
3. A risk retention group chartered in a state other than Nevada
that is seeking to transact insurance as a risk retention group in this
State must comply with the provisions of NRS 695E.150 to 695E.210 , inclusive.
(Added to NRS by 1987, 1330; A 1995, 1782; 2005, 2158 )
Before transacting insurance in this state, a risk retention group must
submit to the Commissioner:
1. A statement of registration identifying:
(a) Each state in which the risk retention group is chartered or
licensed as a liability insurer;
(b) The date of its charter;
(c) Its principal place of business; and
(d) Such other information, including information concerning its
membership, as the Commissioner requires to verify its qualification as a
risk retention group;
2. A copy of its plan of operation and any revisions of the plan
submitted to its state of domicile, except with respect to any line or
classification of liability that was:
(a) Defined in the Product Liability Risk Retention Act of 1981
before October 27, 1986; and
(b) Offered before that date by a risk retention group that had
been chartered and operating for not less than 3 years before that date;
and
3. A statement appointing the Commissioner as its agent for
service of process pursuant to NRS 680A.250 , together with the fee for filing a power of
attorney required by subsection 4 of NRS 680B.010 .
(Added to NRS by 1987, 1331; A 1995, 1783)
A risk retention group transacting
insurance in this state shall submit to the Commissioner:
1. A copy of the group’s financial statement submitted to its
state of domicile, which must be certified by an independent public
accountant and contain a statement of opinion on its reserves for loss
and expenses of loss adjustment made by a member of the American Academy
of Actuaries or another qualified specialist in reserves for loss;
2. A copy of each examination of the risk retention group,
certified by the Commissioner or other public officer conducting the
examination;
3. Upon the request of the Commissioner, a copy of any audit
performed with respect to the risk retention group; and
4. Such other information as the Commissioner requires to verify
its continuing qualification as a risk retention group.
(Added to NRS by 1987, 1331)
1. A risk retention group and its agents and representatives are
subject to the provisions of NRS 686A.010 to 686A.310 , inclusive. Any injunction obtained pursuant
to those sections must be obtained from a court of competent jurisdiction.
2. All premiums paid for coverages within this state to a risk
retention group are subject to the provisions of chapter 680B of NRS. Each risk retention group shall report all
premiums paid to it and shall pay the taxes on premiums and any related
fines or penalties for risks resident, located or to be performed in the
state.
(Added to NRS by 1987, 1331; A 1995, 1633, 1783; 1997, 549)
A policy issued by a risk
retention group must contain in 10-point type on the front page and the
declaration page, 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 insolvency guaranty funds are not
available for your risk retention group.
(Added to NRS by 1987, 1332)
1. A risk retention group shall submit to an examination by the
Commissioner to determine its financial condition if the commissioner of
insurance of the jurisdiction in which the group is chartered does not
initiate such an examination within 60 days after a request by the
Commissioner of Insurance of this state. The examination must be
coordinated to avoid unjustified repetition and conducted in an
expeditious manner. The Commissioner shall give due consideration to the
procedure outlined in the handbook for examiners sponsored by the
National Association of Insurance Commissioners.
2. A risk retention group not chartered in this state and doing
business in this state shall comply with a lawful order issued in a
proceeding for voluntary dissolution or in a delinquency proceeding
commenced by a commissioner of insurance of any state if there has been a
finding of financial impairment after an examination conducted pursuant
to subsection 1.
3. An order issued by a District Court of the United States,
entered upon a finding that a risk retention group is in a hazardous
financial condition, that enjoins the group from conducting operations or
transacting insurance in any state, must be enforced by the district
courts of this state.
(Added to NRS by 1987, 1332)
A risk retention group shall not:
1. Transact insurance with any person who is not eligible for
membership in the risk retention group;
2. Conduct any business in this state if an insurer is directly or
indirectly a member or owner of the group, unless all the members of the
group are insurers;
3. Transact insurance or otherwise operate while financially
impaired or in a hazardous financial condition;
4. Issue any insurance policy with terms providing, or which have
been construed as providing, coverage prohibited by a specific statute of
this state or declared unlawful by the highest court of this state which
has rendered a judgment concerning the legality of that coverage; or
5. Join or contribute financially to the Nevada Insurance Guaranty
Association, or to any similar organization or fund in this state, and
the provisions of chapter 687A of NRS do
not apply to a risk retention group. A risk retention group and its
insureds shall not accept any benefit from such an organization or fund
for claims arising out of the operation of the risk retention group.
(Added to NRS by 1987, 1332; A 1995, 1783)
MISCELLANEOUS PROVISIONS
1. Any person acting, or offering to act, as an agent or broker
for a purchasing group, a member of a purchasing group under the group
policy, or a risk retention group transacting insurance in this state is
subject to the provisions of chapters 683A
and 685A of NRS.
2. Except as otherwise provided in this chapter, the provisions of
chapter 679B of NRS apply to purchasing
groups and risk retention groups, and to the provisions of this chapter,
to the extent that the provisions of chapter 679B of NRS are not specifically preempted by the
Product Liability Risk Retention Act of 1981, as amended by the Risk
Retention Amendments of 1986.
3. A risk retention group that violates any provision of this
chapter is subject to the fines and penalties, including revocation of
its right to do business in this state, applicable to licensed insurers
under this title.
(Added to NRS by 1987, 1333; A 1995, 1784)
On or before March 1 of each year, a purchasing group and a risk
retention group shall submit to the Commissioner a written notice of its
intention to continue doing business in Nevada.
(Added to NRS by 1991, 2037)
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