NRRA Taking a Proactive Approach to Potential Florida RRG Legislation

The National Risk Retention Association (NRRA) is taking a proactive approach ahead of the next Florida legislative session in opposing legislation it says would discriminate against risk retention groups (RRGs).

Florida legislators ended their 2023 session earlier this year without giving final approval to SB 516. Under the measure, RRGs writing that coverage in the state would have been required to possess at least an A.M. Best "A" rating. In addition, such RRGs would have been required to have a minimum Best financial status category of "VIII," meaning $100 million to $250 million in capital surplus, in order to conduct business in Florida.

In anticipation of the 2024 session, the NRRA said it is proactively working to develop educational processes and alliances that will help support "its efforts to find a legally fair and objective solution to the cause of this year's earlier legislative crisis, as well as a favorable solution there for all RRGs in the state."

The NRRA said those efforts have been joined by Paul Handerhan, president of the Federal Association for Insurance Reform (FAIR), which supported the NRRA's opposition to the 2023 legislation, as well as the Florida Transportation Builders' Association and its president, Ananth Prasad.

In a letter opposing SB 516 during this year's session, Joseph E. Deems, executive director of the NRRA, said, "SB 516 will have a serious negative effect on virtually all of the risk retention groups currently writing commercial auto coverage in Florida and their Florida policyholders and will most certainly have a direct and damaging impact for the Florida commercial auto insurance market as a whole.

"Without a doubt, SB 516 will diminish competition in Florida's commercial auto insurance market and will cause most Floridians who need that coverage to pay much higher premiums," Mr. Deems wrote.

Mr. Deems also suggested that the Florida measure would violate the federal Liability Risk Retention Act of 1986, which enabled the formation of RRGs.

In a recent newsletter outlining its current efforts to oppose similar legislation, the NRRA said, "H57/SB516's flawed efforts earlier this year to change Florida's Financial Responsibility Law (§324.021[8]) did not just threaten to endanger a majority of the risk retention group products in Florida. NRRA's campaign emphasized that it (the Bill) also sought to correct a problem which factually and legally did not exist! This was because H57/SB516's sponsors were completely unaware of the fact that the commercial auto liability coverage of risk retention groups has, for well over a decade, satisfied the financial responsibility requirements of the state."

The NRRA said it has now developed a plan to help educate legislators, regulators, and other public entity decision-makers to the fact that risk retention groups are authorized by federal law to sell insurance in all states where they are registered, including Florida.

The NRRA said its efforts will look to help leaders understand and appreciate the "purpose-driven risk retention group"—an RRG properly formed and for the right reasons—and how such entities continue to outperform other types of liability insurance strategies.