risk retention (c) working group€¦ · committees, and make other governing decisions....

© 2012 National Association of Insurance Commissioners

Risk Retention (C) Working Group

August 12, 2012 Atlanta, GA

© 2012 National Association of Insurance Commissioners 1

2012 Summer National Meeting

Atlanta, GA

RISK RETENTION (C) WORKING GROUP Sunday, August 12, 2012

3:00 – 4:00 p.m. Atlanta Marriott Marquis—Room A601—Atrium Level

ROLL CALL David Provost, Chair Vermont Angela Nelson Missouri Jill Jacobi California Steve Matthews Montana Steve Kinion Delaware Mike Lynch Nevada Sean O’Donnell/Dana Shepherd District of Columbia Joe Fritsch/Barbara Kluger New York Sanford Saito Hawaii Denise Engle Oklahoma Clarissa Preston/Mike Boutwell Louisiana Leslie Jones South Carolina Michelle Riddering Michigan Lee Barclay Washington

AGENDA 1. Receive Report of the Risk Retention Handbook (C) Subgroup—Jill Jacobi (CA) Attachment 2. Discuss State Implementation of Statement of Voluntary Dissolution for Risk Retention Groups

(RRGs) (Form 16b)—Jill Jacobi (CA)

3. Receive an Update on the Work of Other NAIC Groups—Aaron Brandenburg (NAIC) • Consideration of Model Risk Retention Act (#705) by Financial Regulation Standards and

Accreditation (F) Committee • Amendments to the Business Transacted with Producer Controlled Property/Casualty

Insurer Act (#325)

Attachment

4. Discuss Change in Credit for Reinsurance Model Law (#785) and Credit for Reinsurance Model

Regulation (#786) and its Effect on RRGs—David Provost (VT)

5. Any Other Matters Brought Before the Working Group—David Provost (VT) Attachment

6. Adjournment W:\National Meetings\2012\Summer\Agenda\RiskWG.docx


Report of the Risk Retention Handbook (C) Subgroup

© 2012 National Association of Insurance Commissioners 1

Conference Call

RISK RETENTION HANDBOOK AND MODEL LAW AMENDMENT (C) SUBGROUP

Summary Report

The Risk Retention Handbook and Model Law Amendment (C) Subgroup met via conference call July 25, July 10, June 6 and March 21, 2012. During these meetings, the Subgroup: 1. Approved numerous revisions to Sections I, II, III and V, and Appendices of the Risk Retention and Purchasing Group

Handbook. The Subgroup expects to finalize revisions to the remainder of the handbook in the next month or two.

W:\National Meetings\2012\Summer\Cmte\C\RRWG\RRSubgroupSummary.doc


Voluntary Dissolution for RRGs – Form 16b

Form 16b

Risk Retention Group Name: ____________________________________________________________________NAIC Number _________

Statement of Voluntary Dissolution Summary of License Status in Non-domicile States

This statement is submitted to the Risk Retention Group’s domestic state regulator to summarize how the risk retention group has addressed its

registration in other states. Limit the information to those states in which a registration has been held within the last 10 years.

Registration has been held with the states listed below:

Date of notification or approval of surrender of registration by this state. If surrender is not in effect, attach explanation.

Do any policyholder obligations of the dissolving risk retention group exist in this state? If yes, attach explanation.

Have all premium taxes, fees and other monetary obligations owed to this state been paid? If no, attach explanation.

I acknowledge that I am an officer of the risk retention group, am authorized to execute and am executing this document on behalf of the risk retention group. I hereby certify under penalty of perjury under the laws of the applicable jurisdictions that all of the forgoing, including attachments, is true and correct as of the date of signature below. Executed at ____________________________________.

_________________________ __________________________________ __________________________________ Date Signature of Officer Printed Name

__________________________________ Title

Attachment Two-A1 Property and Casualty Insurance (C) Committee

3/5/12


To: Cindy Donovan and Jill Jacobi, Co-Chairs, National Treatment and Coordination (E) Working Group

From: Leslie Jones, Chair, Risk Retention (C) Working Group Date: December 22, 2011 Re: Referral Regarding the Draft Statement of Voluntary Dissolution Form 16b for Risk Retention Groups The Risk Retention (C) Working Group submits the following responses to your June 17, 2011 memorandum regarding the Draft Statement of Voluntary Dissolution Form 16b for Risk Retention Groups. The Working Group decided:

1. It should be mandatory for a risk retention group electing to voluntarily dissolve to complete Form 16b and provide it to the domestic regulator.

2. The domestic regulator should promptly communicate the information contained in the completed Form 16b to all other states in which that risk retention group is registered.

3. The domestic states should share the Form 16b with non-domestic regulators confidentially via email. Some states may need to either get a confirmation email that the material can be accepted confidentially before they send it or invoke the global confidentiality agreement.

4. The risk retention group should complete and file the form with the domestic regulator as soon as possible.

The Risk Retention Handbook and Model Law Amendment (C) Subgroup is currently updating the Risk Retention Group and Purchasing Group Handbook and will include language covering Form 16b, as well as include the Form as an Appendix to the Handbook. Should you have any questions about the information contained in this response, please feel free to contact me at [email protected] or Aaron Brandenburg (NAIC staff) at 816-783-8271 or [email protected]. W:\National Meetings\2012\Spring\Cmte\C\RRWG\Handouts\RR(C) WG Response to Referral Regarding Form 16b.docx

mailto:[email protected]

mailto:[email protected]

The Risk Retention Handbook (C) Subgroup is proposing the following language be added to Section II.B.1 of the Risk Retention and Purchasing Group Handbook:

The Risk Retention (C) Working Group reviewed a statement of voluntary dissolution for risk

retention groups (Form 16b) (attached as Appendix G) in December 2011 and developed the following recommendations: • It should be mandatory for a risk retention group electing to voluntarily dissolve to

complete Form 16b and provide it to the domestic regulator.

• The domestic regulator should promptly communicate the information contained in the completed Form 16b to all other states in which that risk retention group is registered. I-SITE may be used, but email to the chief examiner is the recommended mode of communication.

• The domestic states should share the Form 16b with non-domestic regulators confidentially via email. Some states may need to either get a confirmation email that the material can be accepted confidentially before they send it or invoke the global confidentiality agreement.

• The risk retention group should complete and file the form with the domestic regulator as soon as possible.


Item Related to Section 3C of the Model Risk Retention Act

Model Risk Retention Act

705-6 © 2012 National Association of Insurance Commissioners

Section 3. Risk Retention Groups Chartered in this State

A. (1) A risk retention group shall, pursuant to the provisions of Section [insert appropriate reference to Insurance Law], be chartered and licensed to write only liability insurance pursuant to this Act and, except as provided elsewhere in this Act, must comply with all of the laws, rules, regulations and requirements applicable to insurers chartered and licensed in this state and with Section 4 of this Act to the extent such requirements are not a limitation on laws, rules, regulations or requirements of this state.

(2) Notwithstanding any other provision to the contrary, all risk retention

groups chartered in this state shall file with the department and the National Association of Insurance Commissioners (NAIC), an annual statement in a form prescribed by the NAIC and in diskette form, if required by the Commissioner and completed in accordance with its instructions and the NAIC Accounting Practices and Procedures Manual.

B. Before it may offer insurance in any state, each risk retention group shall also

submit for approval to the insurance commissioner of this state a plan of operation or feasibility study. 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 or feasibility study, within ten (10) days of any such 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 or study is approved by the commissioner.

C. At the time of filing its application for charter, the risk retention group shall provide

to the commissioner in summary form the following information: the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded, and the states in which the group intends to operate. Upon receipt of this information, the commissioner shall forward the information to the National Association of Insurance Commissioners. Providing notification to the NAIC is in addition to and shall not be sufficient to satisfy the requirements of Section 4 or any other sections of this Act.

D. Governance Standards For Risk Retention Groups - Within a year of the effective

date of this Act, existing risk retention groups shall be in compliance with the following Governance Standards. New risk retention groups shall be in compliance with the standards at the time of licensure.

(1) Board of Directors – The “board of directors” or “board” as used in this

section, means the governing body of the risk retention group elected by the shareholders or members to establish policy, elect or appoint officers and committees, and make other governing decisions. “Director” as used in this section, means a natural person designated in the articles of the risk retention group, or designated, elected or appointed by any other manner, name or title to act as a director.

(a) Independent Directors The board of directors of the risk retention

group shall have a majority of independent directors. If the risk retention group is a reciprocal, then the attorney-in-fact would be required to adhere to the same standards regarding independence of

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