WASHINGTON (July 9, 2008) – Legislation allowing risk retention groups and risk purchasing groups to provide property insurance could cause problems for insurance consumers and companies, said the National Association of Mutual Insurance Companies (NAMIC). NAMIC’s comments followed House subcommittee approval of the legislation today.
The House Financial Services’ Subcommittee on Capital Markets, Insurance, and Government Sponsored enterprises passed H.R. 5792, the Increasing Insurance Coverage Options for Consumers Act of 2008, which would expand the Liability Risk Retention Act. The law currently allows RRGs to cover all types of commercial liability risks except workers’ compensation.
NAMIC agrees that RRGs have had a small but important effect on the availability and affordability of commercial liability insurance for certain groups, explained Jimi Grande, NAMIC’s vice president of government and political affairs. However, he warned that the legislation could create an unfair competitive environment.
“Admitted carriers are subject to the myriad of state regulations,” he said. “Allowing RRGs, which enjoy a lesser degree of regulation, to provide additional coverages that are readily available in the marketplace would provide a competitive advantage over traditional, conventionally formed insurers.
“The expansion of the RRGs into broader commercial insurance, including liabilities owed to individual consumers, is problematic, and we do not believe such an expansion should be approved at this time,” Grande added.
During today’s markup session, Rep. Dennis Moore, D-Kan., pledged to work with stakeholders as the legislation moves forward. “We appreciate Rep. Moore’s sentiment, and look forward to working with members of Congress on this legislation,” Grande said “NAMIC is supportive of efforts in Congress that would better provide for an open and fair competitive marketplace in the insurance industry affording a level playing field for all market participants.”
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Posted: Wednesday, July 09, 2008 12:00:00 AM. Modified: Tuesday, July 24, 2012 2:31:39 PM.
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