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Montana Insurance Commissioner Withdraws Support of Nevada in Court Case Against RRG

December 21, 2011 -- The Montana Captive Insurance Association, Inc. (MCIA) today reported that Montana Insurance Commissioner Monica Lindeen has withdrawn her previously expressed support of action taken by Nevada Insurance Commissioner Brett Barratt to shut down a Vermont-domiciled risk retention group which had been lawfully operating in Nevada for several years.

This position reversal was prompted by a dialogue with members of the Montana Captive Insurance Association, Inc. (MCIA), who provided compelling information and analysis detailing why the Nevada regulator continues to improperly interpret key provisions of the Liability Risk Retention Act (LRRA).

This productive discussion resulted in the Montana State Auditor's office issuing a letter last week to the United States Court of Appeals for the Ninth Circuit, advising that her state is withdrawing its letter dated November 15, 2011 informing the court that it no longer wishes to be an amicus in support of the state of Nevada in the case of Alliance of Nonprofits for Insurance, RRG v. Brett J. Barratt, Commissioner of Insurance of the State of Nevada; Department of Business and Industry, Division of Insurance; State of Nevada.

"This is great example of how well Montana's captive insurance industry works with our regulator on important industry issues," said MCIA Board Chairperson Brenda Olson.  "It also reinforces Commissioner Lindeen's reputation as an independent thinker who can effectively evaluate complex regulatory issues when provided with the necessary objective information."

A federal trial court ruled in favor of the Alliance of Nonprofits for Insurance earlier this year, concluding that action taken by the Nevada insurance commissioner to prohibit the RRG from providing automobile liability insurance to hundreds of non-profit organizations throughout the state was preempted by the LRRA.  Nevada has appealed the ruling.

In addition to providing legal and public policy arguments why Nevada's litigation should not be supported, Commissioner Lindeen was reminded of a similar situation about two years ago when a Montana-licensed RRG was improperly restricted from doing business in California.  Unfortunately the RRG in question did not have the financial resources to litigate the case so it was forced to cease operations in that state.  She appreciated that this situation undermines the authority of the home-state regulator.

MCIA representatives note that these scenarios highlight why it is so important to pass federal legislation currently pending in Congress that would modernize the LRRA, including a provision to permit  RRGs to access a federal arbitration process in connection with actions taken by non-domiciliary regulators.   The association has actively pushed for the passage of this bill in coordination with the Self-Insurance Institute of America, Inc. and other industry groups.

MCIA is a membership-based organization dedicated to promoting the Montana captive insurance industry.  Additional information about the association can be accessed on-line at www.mtcaptives.org, or by calling 866/388-6242.

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