Nebraska Statutes Do Not Preempt Arbitration Clause of RRGs

The Nebraska Supreme Court reversed a lower court decision and ruled that Nebraska statutes prohibiting mandatory clauses in insurance contracts do not preempt the Federal Liability Risk Retention Act with respect to foreign risk retention groups.

Allied Professionals Insurance Company RRG (APIC) had issued a professional liability policy to a Nebraska chiropractor. The policy included a provision requiring binding arbitration contrary to Nebraska state law. The district court had previously ruled neither the Federal Arbitration Act nor the Federal Liability Risk Retention Act preempted state statutes.

APIC is domiciled in Arizona. The Demotech 2013 year-end report indicates the RRG has about $15.2 million in net written premium, $14.3 million in policyholder surplus, and a combined ratio of 91.5 percent. Read the Nebraska Advance Sheets for more information about this litigation.