Jon Harkavy was involved in the passage of the Liability Risk Retention Act (LRRA) in 1986, and now serves on the Board of Directors of NRRA. He shares with WRIN.tv some evolution on the law, the impact on State regulation, and keys to effective regulation going forward.

Since the passage of the Liability Risk Retention Act was passed, RRGs have provided employers have band together to form group captives to better manage risk. Mr. Harkavy points out that the 1986 LRRA legislation actually amended the 1981 Act, allowing RRGs to underwrite General Liability risk. IN the 1986 law, Congress made it clear that they did not want to be part of regulation of the law. Hence, RRGs could be licensed in one State and with limited preemptions, operate in all 50 States.

Over time, State regulators have become more comfortable with the preemption. Mr. Harkavy points out that some States have over-reached their authority under the law, particularly on registration, and some fees appear excessive.

Mr. Harkavy believes the NAIC respects he law. He believes the greatest concern going forward are the proper standards set by the NAIC for RRGs, and the NAIC’s accreditation process. He hopes to see a better relationship between the NAIC and NRRA going forward so that RRGs are not treated as standard or surplus lines insurance carriers.

For more from the 2015 NRRA Conference, visit the WRIN.tv On Demand Library.

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