The bill, aiming to revamp the federal Liability Risk Retention Act (LRRA) of 1986, would allow risk retention groups (RRGs) to write property coverage. The bill also addresses several standards for RRGs recommended by the Government Accountability Office (GAO) in a 2005 study of the RRG industry while concluding that RRGs are a beneficial form of commercial insurance.
Under the existing LRRA, RRGs may insure against the risks of liabilities such as product failure or medical malpractice and are at present limited to offering liability coverage. Allowing RRGs and RPGs to expand their insurance offerings to include commercial property coverage would help to stabilize prices and increase coverage availability in the commercial property insurance marketplace, argue supporters of the bill.
According to Self-Insurance Institute of America President Dick Goff, the bill is "an important step toward solving the problems of availability and affordability of commercial property insurance through the United States by permitting alternative risk transfer solutions." says. SIIA is a national trade association serving companies involved in the self-insurance/alternative risk transfer industry.
SIIA's COO Mike Ferguson says the legislation will provides another option for commercial property insurance coverage for businesses. "It provides an opportunity for businesses where their insurance needs are currently being met," he said, especially for businesses in high-risk areas such as coastal property or areas prone to natural catastrophes. Ferguson said that coastal property is a primary reason for the legislation, however, if passed, the expansion could be targeted toward any commercial risk in need of property coverage, including small and mid-sized businesses.
RRGs “provide competition in the marketplace, helping to increase coverage availability and keep costs reasonable. RIMS is pleased that the proposed legislation provides the opportunity for these groups to expand their programs to include property coverage,” says Terry Fleming, member of Risk and Insurance Management Society (RIMS) board of directors and director of risk management for Montgomery County, Maryland.