US (United States) Code. Title 15. Chapter 65: Liability Risk Retention

Codificación normativa de EEUU (Estados Unidos). Legislación federal estadounidense # Commerce and Trade

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-CITE-

15 USC CHAPTER 65 - LIABILITY RISK RETENTION 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 65 - LIABILITY RISK RETENTION

.

-HEAD-

CHAPTER 65 - LIABILITY RISK RETENTION

-MISC1-

Sec.

3901. Definitions.

3902. Risk retention groups.

(a) Exemptions from State laws, rules, regulations,

or orders.

(b) Scope of exemptions.

(c) Licensing of agents or brokers for risk retention

groups.

(d) Documents for submission to State insurance

commissioners.

(e) Power of courts to enjoin conduct.

(f) State powers to enforce State laws.

(g) States' authority to sue.

(h) State authority to regulate or prohibit ownership

interests in risk retention groups.

3903. Purchasing groups.

(a) Exemptions from State laws, rules, regulations,

or orders.

(b) Scope of exemptions.

(c) Licensing of agents or brokers for purchasing

groups.

(d) Notice to State insurance commissioners of intent

to do business.

(e) Designation of agent for service of documents and

process.

(f) Purchases of insurance through licensed agents or

brokers acting pursuant to surplus lines laws.

(g) State powers to enforce State laws.

(h) States' authority to sue.

3904. Securities laws.

(a) Ownership interest of members in risk retention

groups.

(b) Investment companies.

(c) State blue sky laws.

3905. Clarification concerning permissible State authority.

(a) No exemption from State motor vehicle no-fault

and motor vehicle financial responsibility

laws.

(b) Applicability of exemptions.

(c) Prohibited insurance policy coverage.

(d) State authority to specify acceptable means of

demonstrating financial responsibility.

3906. Injunctive orders issued by United States district courts.

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15 USC Sec. 3901 01/06/03

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TITLE 15 - COMMERCE AND TRADE

CHAPTER 65 - LIABILITY RISK RETENTION

-HEAD-

Sec. 3901. Definitions

-STATUTE-

(a) As used in this chapter -

(1) ''insurance'' means primary insurance, excess insurance,

reinsurance, surplus lines insurance, and any other arrangement

for shifting and distributing risk which is determined to be

insurance under applicable State or Federal law;

(2) ''liability'' -

(A) means legal liability for damages (including costs of

defense, legal costs and fees, and other claims expenses)

because of injuries to other persons, damage to their property,

or other damage or loss to such other persons resulting from or

arising out of -

(i) any business (whether profit or nonprofit), trade,

product, services (including professional services),

premises, or operations, or

(ii) any activity of any State or local government, or any

agency or political subdivision thereof; and

(B) does not include personal risk liability and an

employer's liability with respect to its employees other than

legal liability under the Federal Employers' Liability Act (45

U.S.C. 51 et seq.);

(3) ''personal risk liability'' means liability for damages

because of injury to any person, damage to property, or other

loss or damage resulting from any personal, familial, or

household responsibilities or activities, rather than from

responsibilities or activities referred to in paragraphs (2)(A)

and (2)(B);

(4) ''risk retention group'' means any corporation or other

limited liability association -

(A) whose primary activity consists of assuming, and

spreading all, or any portion, of the liability exposure of its

group members;

(B) which is organized for the primary purpose of conducting

the activity described under subparagraph (A);

(C) which -

(i) is chartered or licensed as a liability insurance

company under the laws of a State and authorized to engage in

the business of insurance under the laws of such State; or

(ii) before January 1, 1985, was chartered or licensed and

authorized to engage in the business of insurance under the

laws of Bermuda or the Cayman Islands and, before such date,

had certified to the insurance commissioner of at least one

State that it satisfied the capitalization requirements of

such State, except that any such group shall be considered to

be a risk retention group only if it has been engaged in

business continuously since such date and only for the

purpose of continuing to provide insurance to cover product

liability or completed operations liability (as such terms

were defined in this section before October 27, 1986);

(D) which does not exclude any person from membership in the

group solely to provide for members of such a group a

competitive advantage over such a person;

(E) which -

(i) has as its owners only persons who comprise the

membership of the risk retention group and who are provided

insurance by such group; or

(ii) has as its sole owner an organization which has as -

(I) its members only persons who comprise the membership

of the risk retention group; and

(II) its owners only persons who comprise the membership

of the risk retention group and who are provided insurance

by such group;

(F) whose members are engaged in businesses or activities

similar or related with respect to the liability to which such

members are exposed by virtue of any related, similar, or

common business, trade, product, services, premises, or

operations;

(G) whose activities do not include the provision of

insurance other than -

(i) liability insurance for assuming and spreading all or

any portion of the similar or related liability exposure of

its group members; and

(ii) reinsurance with respect to the similar or related

liability exposure of any other risk retention group (or any

member of such other group) which is engaged in businesses or

activities so that such group (or member) meets the

requirement described in subparagraph (F) for membership in

the risk retention group which provides such reinsurance; and

(H) the name of which includes the phrase ''Risk Retention

Group''. (FOOTNOTE 1)

(FOOTNOTE 1) So in original. The period probably should be a

semicolon.

(5) ''purchasing group'' means any group which -

(A) has as one of its purposes the purchase of liability

insurance on a group basis;

(B) purchases such insurance only for its group members and

only to cover their similar or related liability exposure, as

described in subparagraph (C);

(C) is composed of members whose businesses or activities are

similar or related with respect to the liability to which

members are exposed by virtue of any related, similar, or

common business, trade, product, services, premises, or

operations; and

(D) is domiciled in any State;

(6) ''State'' means any State of the United States or the

District of Columbia; and

(7) ''hazardous financial condition'' means that, based on its

present or reasonably anticipated financial condition, a risk

retention group is unlikely to be able -

(A) to meet obligations to policyholders with respect to

known claims and reasonably anticipated claims; or

(B) to pay other obligations in the normal course of

business.

(b) Nothing in this chapter shall be construed to affect either

the tort law or the law governing the interpretation of insurance

contracts of any State, and the definitions of liability, personal

risk liability, and insurance under any State law shall not be

applied for the purposes of this chapter, including recognition or

qualification of risk retention groups or purchasing groups.

-SOURCE-

(Pub. L. 97-45, Sec. 2, Sept. 25, 1981, 95 Stat. 949; Pub. L.

98-193, Dec. 1, 1983, 97 Stat. 1344; Pub. L. 99-563, Sec. 3, 4,

12(b), Oct. 27, 1986, 100 Stat. 3170, 3171, 3177.)

-REFTEXT-

REFERENCES IN TEXT

The Federal Employers' Liability Act (45 U.S.C. 51 et seq.),

referred to in subsec. (a)(2)(B), is act Apr. 22, 1908, ch. 149, 35

Stat. 65, as amended, which is classified generally to chapter 2

(Sec. 51 et seq.) of Title 45, Railroads. For complete

classification of this Act to the Code, see Short Title note set

out under section 51 of Title 45 and Tables.

-COD-

CODIFICATION

October 27, 1986, referred to in subsec. (a)(4)(C)(ii), was in

the original ''the date of the enactment of the Risk Retention Act

of 1986'', which was translated as meaning the date of enactment of

the Risk Retention Amendments of 1986 to reflect the probable

intent of Congress.

-MISC3-

AMENDMENTS

1986 - Subsec. (a)(1) to (3). Pub. L. 99-563, Sec. 3(a),

redesignated par. (2) as (1), added pars. (2) and (3), and struck

out former par. (1) defining completed operations liability, and

former par. (3) defining product liability.

Subsec. (a)(4). Pub. L. 99-563, Sec. 4(a)(1), struck out

''taxable as a corporation, or as an insurance company, formed

under the laws of any State, Bermuda, or the Cayman Islands'' after

''association'' in introductory provisions.

Subsec. (a)(4)(A). Pub. L. 99-563, Sec. 4(a)(2), substituted

''liability exposure'' for ''product liability or completed

operations liability risk exposure''.

Subsec. (a)(4)(C). Pub. L. 99-563, Sec. 4(a)(3), amended subpar.

(C) generally. Prior to amendment, subpar. (C) read as follows:

''which is chartered or licensed as an insurance company and

authorized to engage in the business of insurance under the laws of

any State, or which is so chartered or licensed and authorized

before January 1, 1985, under the laws of Bermuda or the Cayman

Islands, except that any group so chartered or licensed and

authorized under the laws of Bermuda or the Cayman Islands shall be

considered to be a risk retention group only after it has certified

to the insurance commissioner of at least one State that it

satisfies the capitalization requirements of such State;''.

Subsec. (a)(4)(E) to (H). Pub. L. 99-563, Sec. 4(a)(4), added

subpars. (E) to (H), and struck out former subpar. (E) which read

as follows: ''which is composed of member each of whose principal

activity consists of the manufacture, design, importation,

distribution, packaging, labeling, lease, or sale of a product or

products;''.

Subsec. (a)(5). Pub. L. 99-563, Sec. 4(b), amended par. (5)

generally. Prior to amendment, par. (5) read as follows: ''

'purchasing group' means any group of persons which has as one of

its purposes the purchase of product liability or completed

operations liability insurance on a group basis;''.

Subsec. (a)(7). Pub. L. 99-563, Sec. 3(b), added par. (7).

Subsec. (b). Pub. L. 99-563, Sec. 12(b), substituted ''liability,

personal risk liability, and insurance'' for ''product liability

and product liability insurance''.

1983 - Subsec. (b). Pub. L. 98-193 substituted provision that

nothing in this chapter would be construed to affect either the

tort law or the law governing the interpretation of insurance

contracts of any State, and that the definitions of product

liability and product liability insurance under any State law would

not be applied for the purposes of this chapter, including

recognition or qualification of risk retention groups or purchasing

groups for provision that the definition of product liability in

this section would not be construed to affect either the tort law

or the law governing the interpretation of insurance contracts of

any State.

EFFECTIVE DATE OF 1986 AMENDMENT; APPLICABILITY

Section 11(a), (b), and (c)(2) of Pub. L. 99-563 provided that:

''(a) General Rule. - Subject to subsection (b), this Act (see

Short Title of 1986 Amendment note below) shall take effect on the

date of its enactment (Oct. 27, 1986).

''(b) Special Rule Regarding Feasibility Study. - The provisions

of section 3(d) of the Liability Risk Retention Act of 1986 (as

added by section 5(b) of this Act) (15 U.S.C. 3902(d)), relating to

the submission of a feasibility study, shall not apply with respect

to any line or classification of liability insurance which -

''(1) was defined in the Product Liability Risk Retention Act

of 1981 (Pub. L. 97-45, which enacted this chapter) before the

date of the enactment of this Act (Oct. 27, 1986); and

''(2) was offered before such date of enactment by any risk

retention group which has been chartered and operating for not

less than 3 years before such date of enactment.

''(c) Rule Regarding Pollution Liability. -

''(2) Nothing in this Act shall be construed, interpreted or

applied to diminish the obligations of any person to establish or

maintain evidence of financial responsibility or otherwise comply

with any of the requirements of Federal environmental laws,

including but not limited to the Comprehensive Environmental

Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601

et seq.) and the Solid Waste Disposal Act (42 U.S.C. 6901 et

seq.).''

SHORT TITLE OF 1986 AMENDMENT

Section 1 of Pub. L. 99-563 provided that: ''This Act (enacting

sections 3905 and 3906 of this title, amending this section,

sections 3902 and 3903 of this title, and sections 9671 to 9675 of

Title 42, The Public Health and Welfare, enacting provisions set

out as notes under this section and section 9671 of Title 42, and

amending provisions set out as a note under this section) may be

cited as the 'Risk Retention Amendments of 1986'.''

SHORT TITLE

Section 1 of Pub. L. 97-45, as amended by Pub. L. 99-563, Sec.

12(a), Oct. 27, 1986, 100 Stat. 3177, provided that: ''This Act

(enacting this chapter) may be cited as the 'Liability Risk

Retention Act of 1986'.''

OVERSIGHT OF IMPLEMENTATION; REPORT TO CONGRESS

Section 10 of Pub. L. 99-563 provided that:

''(a) In General. - (1) Not later than September 1, 1987, and not

later than September 1, 1989, the Secretary of Commerce shall

submit reports to the Congress concerning implementation of this

Act (see Short Title of 1986 Amendment note above).

''(2) Such report shall be based on -

''(A) the Secretary's consultation with State insurance

commissioners, risk retention groups, purchasing groups, and

other interested parties; and

''(B) the Secretary's analysis of other information available

to the Secretary.

''(b) Contents of the Report. - The report shall describe the

Secretary's views concerning -

''(1) the contribution of this Act (see Short Title of 1986

Amendment note above) toward resolution of problems relating to

the unavailability and unaffordability of liability insurance;

''(2) the extent to which the structure of regulation and

preemption established by this Act is satisfactory;

''(3) the extent to which, in the implementation of this Act,

the public is protected from unsound financial practices and

other commercial abuses involving risk retention groups and

purchasing groups;

''(4) the causes of any financial difficulties of risk

retention groups and purchasing groups;

''(5) the extent to which risk retention groups and purchasing

groups have been discriminated against under State laws,

practices, and procedures contrary to the provisions and

underlying policy of this Act and the Product Liability Risk

Retention Act (as amended by this Act) (Pub. L. 97-45, which

enacted this chapter); and

''(6) such other comments and conclusions as the Secretary

deems relevant to assessment of the implementation of this Act.''

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15 USC Sec. 3902 01/06/03

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TITLE 15 - COMMERCE AND TRADE

CHAPTER 65 - LIABILITY RISK RETENTION

-HEAD-

Sec. 3902. Risk retention groups

-STATUTE-

(a) Exemptions from State laws, rules, regulations, or orders

Except as provided in this section, a risk retention group is

exempt from any State law, rule, regulation, or order to the extent

that such law, rule, regulation, or order would -

(1) make unlawful, or regulate, directly or indirectly, the

operation of a risk retention group except that the jurisdiction

in which it is chartered may regulate the formation and operation

of such a group and any State may require such a group to -

(A) comply with the unfair claim settlement practices law of

the State;

(B) pay, on a nondiscriminatory basis, applicable premium and

other taxes which are levied on admitted insurers and surplus

lines insurers, brokers, or policyholders under the laws of the

State;

(C) participate, on a nondiscriminatory basis, in any

mechanism established or authorized under the law of the State

for the equitable apportionment among insurers of liability

insurance losses and expenses incurred on policies written

through such mechanism;

(D) register with and designate the State insurance

commissioner as its agent solely for the purpose of receiving

service of legal documents or process;

(E) submit to an examination by the State insurance

commissioners in any State in which the group is doing business

to determine the group's financial condition, if -

(i) the commissioner of the jurisdiction in which the group

is chartered has not begun or has refused to initiate an

examination of the group; and

(ii) any such examination shall be coordinated to avoid

unjustified duplication and unjustified repetition;

(F) comply with a lawful order issued -

(i) in a delinquency proceeding commenced by the State

insurance commissioner if there has been a finding of

financial impairment under subparagraph (E); or

(ii) in a voluntary dissolution proceeding;

(G) comply with any State law regarding deceptive, false, or

fraudulent acts or practices, except that if the State seeks an

injunction regarding the conduct described in this

subparagraph, such injunction must be obtained from a court of

competent jurisdiction;

(H) comply with an injunction issued by a court of competent

jurisdiction, upon a petition by the State insurance

commissioner alleging that the group is in hazardous financial

condition or is financially impaired; and

(I) provide the following notice, in 10-point type, in any

insurance policy issued by such group:

''NOTICE

''This policy is issued by your risk retention group. Your risk

retention group may not be subject to all of the insurance laws and

regulations of your State. State insurance insolvency guaranty

funds are not available for your risk retention group.''

(2) require or permit a risk retention group to participate in

any insurance insolvency guaranty association to which an insurer

licensed in the State is required to belong;

(3) require any insurance policy issued to a risk retention

group or any member of the group to be countersigned by an

insurance agent or broker residing in that State; or

(4) otherwise, discriminate against a risk retention group or

any of its members, except that nothing in this section shall be

construed to affect the applicability of State laws generally

applicable to persons or corporations.

(b) Scope of exemptions

The exemptions specified in subsection (a) of this section apply

to laws governing the insurance business pertaining to -

(1) liability insurance coverage provided by a risk retention

group for -

(A) such group; or

(B) any person who is a member of such group;

(2) the sale of liability insurance coverage for a risk

retention group; and

(3) the provision of -

(A) insurance related services;

(B) management, operations, and investment activities; or

(C) loss control and claims administration (including loss

control and claims administration services for uninsured risks

retained by any member of such group);

for a risk retention group or any member of such group with

respect to liability for which the group provides insurance.

(c) Licensing of agents or brokers for risk retention groups

A State may require that a person acting, or offering to act, as

an agent or broker for a risk retention group obtain a license from

that State, except that a State may not impose any qualification or

requirement which discriminates against a nonresident agent or

broker.

(d) Documents for submission to State insurance commissioners

Each risk retention group shall submit -

(1) to the insurance commissioner of the State in which it is

chartered -

(A) before it may offer insurance in any State, a plan of

operation or a feasibility study which includes the coverages,

deductibles, coverage limits, rates, and rating classification

systems for each line of insurance the group intends to offer;

and

(B) revisions of such plan or study if the group intends to

offer any additional lines of liability insurance;

(2) to the insurance commissioner of each State in which it

intends to do business, before it may offer insurance in such

State -

(A) a copy of such plan or study (which shall include the

name of the State in which it is chartered and its principal

place of business); and

(B) a copy of any revisions to such plan or study, as

provided in paragraph (1)(B) (which shall include any change in

the designation of the State in which it is chartered); and

(3) to the insurance commissioner of each State in which it is

doing business, a copy of the group's annual financial statement

submitted to the State in which the group is chartered as an

insurance company, which statement shall be certified by an

independent public accountant and contain a statement of opinion

on loss and loss adjustment expense reserves made by -

(A) a member of the American Academy of Actuaries, or

(B) a qualified loss reserve specialist.

(e) Power of courts to enjoin conduct

Nothing in this section shall be construed to affect the

authority of any Federal or State court to enjoin -

(1) the solicitation or sale of insurance by a risk retention

group to any person who is not eligible for membership in such

group; or

(2) the solicitation or sale of insurance by, or operation of,

a risk retention group that is in hazardous financial condition

or is financially impaired.

(f) State powers to enforce State laws

(1) Subject to the provisions of subsection (a)(1)(G) of this

section (relating to injunctions) and paragraph (2), nothing in

this chapter shall be construed to affect the authority of any

State to make use of any of its powers to enforce the laws of such

State with respect to which a risk retention group is not exempt

under this chapter.

(2) If a State seeks an injunction regarding the conduct

described in paragraphs (1) and (2) of subsection (e) of this

section, such injunction must be obtained from a Federal or State

court of competent jurisdiction.

(g) States' authority to sue

Nothing in this chapter shall affect the authority of any State

to bring an action in any Federal or State court.

(h) State authority to regulate or prohibit ownership interests in

risk retention groups

Nothing in this chapter shall be construed to affect the

authority of any State to regulate or prohibit the ownership

interest in a risk retention group by an insurance company in that

State, other than in the case of ownership interest in a risk

retention group whose members are insurance companies.

-SOURCE-

(Pub. L. 97-45, Sec. 3, Sept. 25, 1981, 95 Stat. 950; Pub. L.

99-563, Sec. 5, 7, 8(a), 12(c), Oct. 27, 1986, 100 Stat. 3172,

3175, 3178.)

-MISC1-

AMENDMENTS

1986 - Subsec. (a)(1)(C). Pub. L. 99-563, Sec. 12(c), struck out

''product liability or completed operations'' before ''liability

insurance losses''.

Subsec. (a)(1)(D). Pub. L. 99-563, Sec. 5(b)(1), redesignated

subpar. (E) as (D), substituted a semicolon for '', and, upon

request, furnish such commissioner a copy of any financial report

submitted by the risk retention group to the commissioners of the

chartering or licensing jurisdiction;'', and struck out former

subpar. (D) which read as follows: ''submit to the appropriate

authority reports and other information required of licensed

insurers under the laws of a State relating solely to product

liability or completed operations liability insurance losses and

expenses;''.

Subsec. (a)(1)(E). Pub. L. 99-563, Sec. 5(b)(1)(A), (c),

redesignated subpar. (F) as (E), further redesignated cl. (ii) as

(i), added cl. (ii), and struck out former cl. (i) which read as

follows: ''the commissioner has reason to believe the risk

retention group is in a financially impaired condition; and''.

Former subpar. (E) redesignated (D).

Subsec. (a)(1)(F). Pub. L. 99-563, Sec. 5(b)(1)(A), (d),

redesignated subpar. (G) as (F) and amended it generally. Prior to

amendment, subpar. (F) read as follows: ''comply with a lawful

order issued in a delinquency proceeding commenced by the State

insurance commissioner if the commissioner of the jurisdiction in

which the group is chartered has failed to initiate such a

proceeding after notice of a finding of financial impairment under

subparagraph (F) of this paragraph;''. Former subpar. (F)

redesignated (E).

Subsec. (a)(1)(G) to (I). Pub. L. 99-563, Sec. 5(b)(1)(A), (e),

added subpars. (G) to (I). Former subpar. (G) redesignated (F).

Subsec. (b). Pub. L. 99-563, Sec. 5(a), amended subsec. (b)

generally. Prior to amendment, subsec. (b) read as follows: ''The

exemptions specified in subsection (a) of this section apply to -

''(1) product liability or completed operations liability

insurance coverage provided by a risk retention group for -

''(A) such group; or

''(B) any person who is a member of such group;

''(2) the sale of product liability or completed operations

liability insurance coverage for a risk retention group; and

''(3) the provision of insurance related services or management

services for a risk retention group or any member of such

group.''

Subsecs. (d) to (h). Pub. L. 99-563, Sec. 5(b)(2), 7, 8(a), added

subsecs. (d) to (h).

SPECIAL RULE REGARDING FEASIBILITY STUDY

The provisions of subsec. (d) of this section, relating to the

submission of a feasibility study, not applicable with respect to

any line or classification of liability insurance which was defined

in this chapter before Oct. 27, 1986, and was offered before such

date by any risk retention group chartered and operating for not

less than 3 years before such date, see section 11(b) of Pub. L.

99-563, set out as an Effective Date of 1986 Amendment;

Applicability note under section 3901 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 3905 of this title.

-CITE-

15 USC Sec. 3903 01/06/03

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TITLE 15 - COMMERCE AND TRADE

CHAPTER 65 - LIABILITY RISK RETENTION

-HEAD-

Sec. 3903. Purchasing groups

-STATUTE-

(a) Exemptions from State laws, rules, regulations, or orders

Except as provided in this section and section 3905 of this

title, a purchasing group is exempt from any State law, rule,

regulation, or order to the extent that such law, rule, regulation,

or order would -

(1) prohibit the establishment of a purchasing group;

(2) make it unlawful for an insurer to provide or offer to

provide insurance on a basis providing, to a purchasing group or

its members, advantages, based on their loss and expense

experience, not afforded to other persons with respect to rates,

policy forms, coverages, or other matters;

(3) prohibit a purchasing group or its members from purchasing

insurance on the group basis described in paragraph (2) of this

subsection;

(4) prohibit a purchasing group from obtaining insurance on a

group basis because the group has not been in existence for a

minimum period of time or because any member has not belonged to

the group for a minimum period of time;

(5) require that a purchasing group must have a minimum number

of members, common ownership or affiliation, or a certain legal

form;

(6) require that a certain percentage of a purchasing group

must obtain insurance on a group basis;

(7) require that any insurance policy issued to a purchasing

group or any members of the group be countersigned by an

insurance agent or broker residing in that State; or

(8) otherwise discriminate against a purchasing group or any of

its members.

(b) Scope of exemptions

The exemptions specified in subsection (a) of this section apply

to -

(1) liability insurance provided to -

(A) a purchasing group; or

(B) any person who is a member of a purchasing group; and

(2) the provision of -

(A) liability coverage;

(B) insurance related services; or

(C) management services;

to a purchasing group or member of the group.

(c) Licensing of agents or brokers for purchasing groups

A State may require that a person acting, or offering to act, as

an agent or broker for a purchasing group obtain a license from

that State, except that a State may not impose any qualification or

requirement which discriminates against a nonresident agent or

broker.

(d) Notice to State insurance commissioners of intent to do

business

(1) A purchasing group which intends to do business in any State

shall furnish notice of such intention to the insurance

commissioner of such State. Such notice -

(A) shall identify the State in which such group is domiciled;

(B) shall specify the lines and classifications of liability

insurance which the purchasing group intends to purchase;

(C) shall identify the insurance company from which the group

intends to purchase insurance and the domicile of such company;

and

(D) shall identify the principal place of business of the

group.

(2) Such purchasing group shall notify the commissioner of any

such State as to any subsequent changes in any of the items

provided in such notice.

(e) Designation of agent for service of documents and process

A purchasing group shall register with and designate the State

insurance commissioner of each State in which it does business as

its agent solely for the purpose of receiving service of legal

documents or process, except that such requirement shall not apply

in the case of a purchasing group -

(1) which -

(A) was domiciled before April 1, 1986; and

(B) is domiciled on and after October 27, 1986; (FOOTNOTE 1)

(FOOTNOTE 1) See Codification note below.

in any State of the United States;

(2) which -

(A) before September 25, 1981, purchased insurance from an

insurance carrier licensed in any State; and

(B) since September 25, 1981, purchases its insurance from an

insurance carrier licensed in any State;

(3) which was a purchasing group under the requirements of this

chapter before October 27, 1986; and

(4) as long as such group does not purchase insurance that was

not authorized for purposes of an exemption under this chapter as

in effect before October 27, 1986.

(f) Purchases of insurance through licensed agents or brokers

acting pursuant to surplus lines laws

A purchasing group may not purchase insurance from a risk

retention group that is not chartered in a State or from an insurer

not admitted in the State in which the purchasing group is located,

unless the purchase is effected through a licensed agent or broker

acting pursuant to the surplus lines laws and regulations of such

State.

(g) State powers to enforce State laws

Nothing in this chapter shall be construed to affect the

authority of any State to make use of any of its powers to enforce

the laws of such State with respect to which a purchasing group is

not exempt under this chapter.

(h) States' authority to sue

Nothing in this chapter shall affect the authority of any State

to bring an action in any Federal or State court.

-SOURCE-

(Pub. L. 97-45, Sec. 4, Sept. 25, 1981, 95 Stat. 951; Pub. L.

99-563, Sec. 6, 8(b), 12(d), Oct. 27, 1986, 100 Stat. 3174, 3175,

3178.)

-COD-

CODIFICATION

October 27, 1986, referred to in subsec. (e)(1)(B), was in the

original ''the date of the enactment of this Act'' which was

translated as meaning the date of the enactment of Pub. L. 99-563,

which enacted subsec. (e), to reflect the probable intent of

Congress.

-MISC3-

AMENDMENTS

1986 - Subsec. (a). Pub. L. 99-563, Sec. 8(b)(1), inserted

reference to section 3905 of this title.

Subsec. (b)(1). Pub. L. 99-563, Sec. 12(d)(1), substituted

''liability insurance'' for ''product liability or completed

operations liability insurance, and comprehensive general liability

insurance which includes either of these coverages,''.

Subsec. (b)(2)(A). Pub. L. 99-563, Sec. 12(d)(2), struck out

''product liability or completed operations insurance, and

comprehensive general'' before ''liability coverage''.

Subsecs. (d) to (h). Pub. L. 99-563, Sec. 6, 8(b)(2), added

subsecs. (d) to (h).

-CITE-

15 USC Sec. 3904 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 65 - LIABILITY RISK RETENTION

-HEAD-

Sec. 3904. Securities laws

-STATUTE-

(a) Ownership interest of members in risk retention groups

The ownership interests of members in a risk retention group

shall be -

(1) considered to be exempted securities for purposes of

section 5 of the Securities Act of 1933 (15 U.S.C. 77e) and for

purposes of section 12 of the Securities Exchange Act of 1934 (15

U.S.C. 78l); and

(2) considered to be securities for purposes of the provisions

of section 17 of the Securities Act of 1933 (15 U.S.C. 77q) and

the provisions of section 10 of the Securities Exchange Act of

1934 (15 U.S.C. 78j).

(b) Investment companies

A risk retention group shall not be considered to be an

investment company for purposes of the Investment Company Act of

1940 (15 U.S.C. 80a-1 et seq.).

(c) State blue sky laws

The ownership interests of members in a risk retention group

shall not be considered securities for purposes of any State blue

sky law.

-SOURCE-

(Pub. L. 97-45, Sec. 5, Sept. 25, 1981, 95 Stat. 952.)

-REFTEXT-

REFERENCES IN TEXT

The Investment Company Act of 1940, referred to in subsec. (b),

is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as amended,

which is classified generally to subchapter I (Sec. 80a-1 et seq.)

of chapter 2D of this title. For complete classification of this

Act to the Code, see section 80a-51 of this title and Tables.

-CITE-

15 USC Sec. 3905 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 65 - LIABILITY RISK RETENTION

-HEAD-

Sec. 3905. Clarification concerning permissible State authority

-STATUTE-

(a) No exemption from State motor vehicle no-fault and motor

vehicle financial responsibility laws

Nothing in this chapter shall be construed to exempt a risk

retention group or purchasing group authorized under this chapter

from the policy form or coverage requirements of any State motor

vehicle no-fault or motor vehicle financial responsibility

insurance law.

(b) Applicability of exemptions

The exemptions provided under this chapter shall apply only to

the provision of liability insurance by a risk retention group or

the purchase of liability insurance by a purchasing group, and

nothing in this chapter shall be construed to permit the provision

or purchase of any other line of insurance by any such group.

(c) Prohibited insurance policy coverage

The terms of any insurance policy provided by a risk retention

group or purchased by a purchasing group shall not provide or be

construed to provide insurance policy coverage prohibited generally

by State statute or declared unlawful by the highest court of the

State whose law applies to such policy.

(d) State authority to specify acceptable means of demonstrating

financial responsibility

Subject to the provisions of section 3902(a)(4) of this title

relating to discrimination, nothing in this chapter shall be

construed to preempt the authority of a State to specify acceptable

means of demonstrating financial responsibility where the State has

required a demonstration of financial responsibility as a condition

for obtaining a license or permit to undertake specified

activities. Such means may include or exclude insurance coverage

obtained from an admitted insurance company, an excess lines

company, a risk retention group, or any other source regardless of

whether coverage is obtained directly from an insurance company or

through a broker, agent, purchasing group, or any other person.

-SOURCE-

(Pub. L. 97-45, Sec. 6, as added Pub. L. 99-563, Sec. 8(c), Oct.

27, 1986, 100 Stat. 3175.)

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 3903 of this title.

-CITE-

15 USC Sec. 3906 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 65 - LIABILITY RISK RETENTION

-HEAD-

Sec. 3906. Injunctive orders issued by United States district

courts

-STATUTE-

Any district court of the United States may issue an order

enjoining a risk retention group from soliciting or selling

insurance, or operating, in any State (or in all States) or in any

territory or possession of the United States upon a finding of such

court that such group is in hazardous financial condition. Such

order shall be binding on such group, its officers, agents, and

employees, and on any other person acting in active concert with

any such officer, agent, or employee, if such other person has

actual notice of such order.

-SOURCE-

(Pub. L. 97-45, Sec. 7, as added Pub. L. 99-563, Sec. 9, Oct. 27,

1986, 100 Stat. 3176.)

-CITE-