Survey of State Regulators on Risk Retention Group

U.S. Government Accountability Office

Introduction

	At the request of Congress, GAO is conducting a review of risk retention groups (RRGs) to determine how they have met the insurance needs of businesses, if the regulatory treatment of domiciled and non-domiciled RRGs differs across states, and if identified differences have resulted in any regulatory concerns. We believe that you can make an important contribution to this current study, and ask that you respond to this survey so we can provide the most complete information about RRGs to Congress. The survey should take about 90 minutes to complete, although additional time may be required if your state has licensed several RRGs. The survey does not need to be completed in one sitting. Your responses can be saved and accessed at a later date. To learn more about completing the questionnaire, printing your responses, and whom to contact if you have questions, click here for help. Thank you for your time and assistance.

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Section I: Your Role as a Domiciliary State Regulator and Requirements for RRGs Domiciled in Your State

	Definitions of acronyms and terms used in this questionnaire Risk Retention Group (RRG): An RRG is any corporation or other limited liability association whose primary activity consists of assuming and spreading all, or any portion of the liability exposure to its group members and who has as its owners, only persons who comprise the membership of the RRG and who are provided insurance by such group. The Liability Risk Retention Act permits RRGs to provide commercial liability insurance for its members and largely exempts them from state insurance laws other than the laws of their domiciliary and licensing state. State of Domicile: The state that charters and licenses an RRG and is responsible for performing regulatory oversight, including examinations. ("State" includes the District of Columbia, and for RRGs licensed before 1985, Bermuda and the Cayman Islands.) Host state: Any state in which an RRG is registered and insures risks but is not licensed and chartered. In Section I, we are asking about the role of your state as a "domiciliary" state for RRGs, the state primarily responsible for regulating an RRG. This information is important, even if your state has not actually licensed or licensed an RRG, because the laws and regulations for domiciling RRGs vary from state to state. In contrast, Section II contains questions pertaining to RRGs insuring risks in, but not domiciled in your state. In addition, in some states RRGs can be licensed under more than one set of laws. When responding to the questions below, please respond for each law under which a RRG could be licensed and chartered, even if a RRG or you the regulator would prefer a RRG be licensed under one law (e.g., a captive law) rather than another (e.g., traditional insurance company law). You will be asked to verify or update some information that your state provided in responses to the previous survey. As indicated in several questions, we would like you to provide us information about insurance statutes and regulations that apply to RRGs licensed in your state. For the regulations only, we are requesting that you provide a hyperlink to the regulation, but you are also welcome to send us a copy of the regulation to RRGSurvey2011@gao.gov.

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1.	*In the previous survey, your state provided the following information regarding use of traditional insurance laws* to license RRGs. • Citation for statute under which RRGs are licensed: ______ • Citation for regulation (website link): ______**

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1a.	Is the information provided above current?

	1.	Yes, the information is current. (click here to skip to question 2)
	2.	No, the information is not current. Please provide the most current information below:
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	• Citation for statute under which RRGs are licensed: (View responses)
	• Citation for regulation (website link): (View responses)

2.	*In the previous survey, your state provided the following information regarding use of captive laws* to license RRGs: • Citation for Statute: ______ • Citation for regulations (website link): ______ • Year captive law enacted: ______ • Year regulations created: ______ • This law /regulation permits RRGs to be licensed as a captive: ______**

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2a.	Is the information provided above current?

	1.	Yes, the information is current. (click here to skip to question 3)
	2.	No, the information is not current. Please provide the most current information below:
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	• Citation for Statute: (View responses)
	• Citation for regulations (website link): (View responses)
	• Year captive law enacted: (View responses)	YYYY
	• Year regulations created: (View responses)	YYYY

3.	In the previous survey, your state provided the following minimum capital and/or surplus requirements for an RRG domiciled in your state under traditional, captive, or other laws and regulations: • RRGs domiciled under traditional insurance laws: ______ • RRGs domiciled under captive insurance laws: ______ • RRGs domiciled under other laws: ______

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3a.	Have any of these minimum capital and surplus requirements changed since January 2004?

	1.	No, the requirements have not changed. (click here to skip to question 4)
	2.	Yes, the requirements have changed. Please provide the most current information below:
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	• RRGs domiciled and licensed under traditional insurance laws: (View responses)	$
	• RRGs domiciled and licensed under captive insurance laws: (View responses)	$
	• RRGs domiciled and licensed under other laws: (View responses)	$

4.	Are RRGs domiciled in your state under traditional insurance laws or regulations required to submit the same financial information as traditional insurance companies to the NAIC?

	1.	Yes, in all circumstances.
	2.	Yes, in some circumstances.
	3.	No (click here to skip to question 5)
	4.	Not applicable, our state does not domicile RRGs under traditional insurance laws. (click here to skip to question 5)
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4a.	If yes, what is the citation for the related statute in question 4 above? Please provide website link below.

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5.	Are RRGs domiciled in your state under captive insurance laws or regulations required to submit the same financial information as traditional insurance companies to the NAIC?

	1.	Yes, in all circumstances.
	2.	Yes, in some circumstances.
	3.	No (click here to skip to question 6)
	4.	Not applicable, our state does not domicile RRGs under captive insurance laws. (click here to skip to question 6)
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5a.	If yes, what is the citation for the related statute in question 5 above? Please provide website link below.

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6.	*Which accounting principle does your state require* RRGs use when filing annual financial statements with your state?** (check only one answer)

	1.	Generally Accepted Accounting Principles (GAAP)
	2.	Statutory Accounting Principles (SAP)
	3.	Modified GAAP
	4.	Modified SAP
	5.	Other (please specify below)
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	If other, please specify:

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7.	*Which accounting principle does your state allow* RRGs use when filing annual financial statements with your state?** (check all that apply)

	1.	Generally Accepted Accounting Principles (GAAP)
	2.	Statutory Accounting Principles (SAP)
	3.	Modified GAAP
	4.	Modified SAP
	5.	Other (please specify below)
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	If other, please specify:

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8.	If you have any comments related to Section I, please write them here:

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Section II, Part A: Your Role as a Host State Regulator For RRGs Operating and Insuring

	In Section II, we are asking about the role of your state as a "host state" regulator. The 1986 Liability Risk Retention Act limits the state laws that may be enforced by the "host state" regulators to RRGs insuring risks in but not domiciled or licensed in their states. This section pertains only to requirements for RRGs operating and insuring risks, but not domiciled in your state. A. Submission of Operational Plans or Feasibility Studies and Financial Statements to Host State Regulators The Liability Risk Retention Act requires that each RRG submit to the insurance commissioner of each state in which it intends to do business, a copy of 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 a copy of any revisions to such plan or study. The Act also requires that each RRG submit 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 licensed 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 member of the American Academy of Actuaries, or a qualified loss reserve specialist.

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9.	As of year-end 2010, how many RRGs were registered with your state to conduct business?
	Number of registered RRGs:
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10.	To the best of your knowledge, has any RRG that insured risks in your state since January 2004 failed to provide copies of its plans of operation or feasibility studies before it started to do business in your state?

	1.	No (click here to skip to question 11)
	2.	Yes
	3.	Not applicable, no RRGs have applied to register in our state since January 2004. (click here to skip to question 11)
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10a.	If you answered yes to question 10, please explain:

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11.	To the best of your knowledge, has any RRG that insured risks in your state since January 2004 ever failed to provide a copy of its annual financial statement to your state insurance department?

	1.	No (click here to skip to question 12)
	2.	Yes
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11a.	If you answered yes to question 11, please explain:

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12.	If you have any comments related to Section II Part A, please write them here:

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Section II, Part B: Your Role as a Host State Regulator For RRGs Operating and Insuring

	B. Identification of RRGs Operating and Insuring Risks in Your State INSTRUCTIONS: To answer questions 13 and 14, please refer to the following table, which lists all RRGs that reported writing premiums in your state to NAIC during 2010. To respond to the questions below, please compare the list of RRGs that reported to NAIC that they wrote premiums in your state in 2010 with your internal records. ______

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13.	To the best of your knowledge, were all of the RRGs reporting to NAIC that they wrote premiums in your state in 2010 also registered to insure risks in your state in 2010? Note: The table above does NOT contain RRGs in your state that did not actively write premiums in 2010. We are only interested in those RRGs that wrote premiums in your state in 2010.

	1.	Yes (click here to skip to question 14)
	2.	No (click here to skip to question 13a)
	3.	Not sure. Some RRGs may have written premiums in our state without first registering with our department, but we are double-checking NAIC's information directly with the RRGs in question. (Request: Please let GAO know if you identify RRGs that operated but were not registered in your state in 2010, even if you have already submitted your survey.) (click here to skip to question 14)
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13a.	If you answered no to question 13, please list the names of RRGs that wrote premiums in your state but were not registered in your state:

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14.	Based on a review of your internal records, did you identify any RRGs that wrote premiums in your state in 2010 but were not listed in NAIC's data in the table above?

	1.	No (click here to skip to question 15)
	2.	Yes (click here to skip to question 14a)
	3.	Do not know. Our state does not track whether registered RRGs wrote premiums in our state. (click here to skip to question 15)
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14a.	If you answered yes to question 14, please list the names of RRGs that wrote premiums in your state in 2010 but were not included in NAIC's data as writing premiums in your state in 2010:

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15.	If you have any comments related to Section II Part B, please write them here:

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Section III: Your Applicable Fees, Taxes and Registration Requirements

	For Part III, we are asking about fees, taxes and other registration requirements that RRGs must satisfy to insure risks in your state. To answer question 19 please refer to the corresponding table, which lists your state's premium tax rates by type of insurer as obtained from NAIC. Please note: The "insurer generally" tax rate was used if your state does not make a distinction between the premium tax rates charged for the types of insurers listed in the table below. If your state has a specific premium tax rate for RRGs, this rate was used for both domiciled and non-domiciled RRGs if no distinction was made.

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16.	Please describe your state's process for non-domiciled RRGs to register to write premiums in your state.

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17.	Please list any documentation and/or filings either required or routinely requested by your state to complete the RRG registration process. Please use the column labeled "Purpose" to explain how this information is used and/or assists your office in its function.

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Type of Information

Requirement or Routine Request

Purpose


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	1.		Requirement
	2.		Routine request
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	1.		Requirement
	2.		Routine request
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	1.		Requirement
	2.		Routine request
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	1.		Requirement
	2.		Routine request
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	1.		Requirement
	2.		Routine request
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18.	How much were the required event-based fees (such as a one-time registration or application fee) and periodic fees (such as annual renewal fees or quarterly filing fees) that each of the following types of insurers had to pay in order to do business in your state as of December 31, 2010? Please enter a description of the fee in the first column, frequency of fee in the second column, and the related dollar amounts for each type of insurer. If any of the fees only apply to one type of insurer, please enter "NA" in the columns for which the fee is not applicable. Please note: if your list of fees for traditional insurance companies is lengthy, we will allow you to send us an attachment of the full list instead of using the chart, which can e-mail to RRGSurvey2011@gao.gov. Please use the chart to list all RRG fees, whether or not there is a corollary fee associated with traditional insurance companies.

	1.	Check box at left if this state does not charge any fees. (click here to skip to question 19)
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Description of fee

Frequency of Fee

Traditional P&C insurers

Domiciled RRGs

Non-domiciled RRGs


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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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	$
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19.	Are the premium tax rates charged by type of insurer listed below correct as of December 31, 2010? Insurers Generally: ______ Property/Casualty: ______ Domiciled RRG: ______ Non-domiciled RRG: ______ Surplus Lines: ______

	1.	Yes, the premium tax rates are correct. (click here to skip to question 20)
	2.	No, the premium tax rates are incorrect. ((Please provide the correct premium tax rates in the table below):
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	Insurers Generally (View responses)	percent
	Property/Casualty: (View responses)	percent
	Domiciled RRG: (View responses)	percent
	Non-domiciled RRG: (View responses)	percent
	Surplus Lines: (View responses)	percent

20.	As of year-end 2010, what was your state's required or mandatory waiting period, if any, applicable to each of the following types of insurers after filing for registration or licensure and before writing business in your state? Please enter a time period (i.e. 60 days, 90 days, 1 year, etc). If any of the types of insurers does not do business in your state, please enter "NA." Note: This question does not reference the application review period. This question refers to the period after the application is approved but before writing business in your state.

	1.	Check box at left if this state does not have any waiting periods. (click here to skip to question 21)
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	Traditional P&C insurers (View responses)
	Domiciled RRGs (View responses)
	Non-domiciled RRGs (View responses)

21.	If you have any comments related to Section III, please write them here:

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Section IV: Regulatory Experiences

	For Part IV, we are asking about your state's regulatory experiences involving RRGs as a domiciliary or host state insurance regulator. To answer questions 22 - 24, please refer to the specific RRG involved with a number (i.e. RRG 1, RRG 2). Please do not provide the specific name of the RRG.

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22.	As a domiciliary state for RRGs, if a request has been made of your state to conduct an examination of a RRG domiciled in your state, please identify each request made during the past 24 months, including the date of the request, a brief explanation of the circumstances, and if your state complied with the request.

	1.	This state is not a domiciliary state for RRGs. (click here to skip to question 23)
	2.	This state has not been requested to conduct an examination of a RRG domiciled in the state. (click here to skip to question 23)
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RRG Number

Date of Request
(click on calendar icon to select date)

Explanation of Circumstances

Did your state comply with the request?


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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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23.	As a host state for RRGs, if your state has asked a domiciliary state to conduct an examination of a RRG operating in your state, please identify each request your state has made during the past 24 months, including the date of request, the domiciliary state to which you made the request, a brief explanation of the circumstances and if the state complied with your request.

	1.	This state has not requested an examination. (click here to skip to question 24)
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RRG Number

Date of Request
(click on calendar icon to select date)

Domiciliary State

Explanation of Circumstances

Did your state comply with the request?


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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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	1.		Yes
	2.		No
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	Questions 24 and 25 ask you to identify actions and proceedings involving your state and an RRG. Question 24 specifically asks about administrative actions and Question 25 specifically asks about civil or criminal proceedings.

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24.	Please identify each administrative regulatory action taken by your state since January 2004, including the date of the action, the domiciliary state of the RRG, and a brief explanation of the circumstances. (An example of an administrative action could be liquidation, seizure or a cease and desist order.)

	1.	To the best of my knowledge, this state has not taken any administrative regulatory action against a RRG. (click here to skip to question 25)
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RRG Number

Date of Action
(click on calendar icon to select date)

Domiciliary State

Explanation of Circumstances and Action Taken


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25.	Please identify any civil or criminal proceeding involving your state and a RRG since January 2004, including the case name or number, name of court, domiciliary state of the RRG, date the lawsuit was filed, a brief explanation of the circumstances, and a brief explanation of its current status.

	1.	To the best of my knowledge, this state has not been involved with any civil or criminal proceeding involving a RRG. (click here to skip to question 26)
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Case Name/Number and Name of Court

Domiciliary State

Date of Filing
(click on calendar icon to select date)

Explanation of Circumstances

Current Status


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26.	If you have any comments related to Section IV, please write them here:

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Section V: Opinions on the Risk Retention Act



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27.	Has your state had any differences in interpretation with other state regulators regarding the definition of "commercial liability insurance" in the last 24 months?

	1.	Yes
	2.	No (click here to skip to question 28)
	3.	Don't know (click here to skip to question 28)
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27a.	If yes, how many differences in interpretation has your state had with other state regulators?

	1.	1-5
	2.	6-10
	3.	More than 10
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27b.	If yes, please characterize the nature of the differences in interpretation.

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28.	Has your state had any differences in interpretation with RRGs regarding the definition of "commercial liability insurance" in the last 24 months?

	1.	Yes
	2.	No (click here to skip to question 29)
	3.	Don't know (click here to skip to question 29)
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28a.	If yes, how many differences in interpretation has your state had with RRGs?

	1.	1-5
	2.	6-10
	3.	More than 10
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28b.	If yes, please characterize the nature of the differences in interpretation.

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29.	Has your state had a difference of opinion with other state regulators regarding the financial solvency of an RRG domiciled or registered and insuring risk in your state?

	1.	Yes
	2.	No (click here to skip to question 30)
	3.	Don't know (click here to skip to question 30)
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29a.	If yes, how many differences of opinion has your state had with other state regulators?

	1.	1-5
	2.	6-10
	3.	More than 10
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29b.	If yes, please characterize the nature of the differences of opinion.

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30.	Does your state believe RRGs have expanded the availability of commercial liability insurance for groups in your state that would otherwise have difficulty in obtaining coverage?

	1.	Yes
	2.	No
	3.	No Opinion
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30a.	Please explain or elaborate on your answer to question 30 here.

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31.	Does your state believe RRGs have improved the affordability of commercial liability insurance for groups in your state that would otherwise have difficulty in obtaining coverage?

	1.	Yes
	2.	No
	3.	No Opinion
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31a.	Please explain or elaborate on your answer to question 31 here.

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32.	How would you characterize the current commercial liability insurance market in your state?

	1.	Hard
	2.	Hard turning to soft
	3.	Soft
	4.	Soft turning to hard
	5.	No Opinion
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32a.	Please explain or elaborate on your answer to question 32 here.

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33.	In your state's opinion, given the current condition of the insurance market, are RRGs needed as a mechanism to provide commercial liability insurance in your state?

	1.	Great extent
	2.	Some extent
	3.	RRGs are not needed to provide commercial liability insurance in my state
	4.	No Opinion
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33a.	Please explain or elaborate on your answer to question 33 here.

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34.	What is your state's opinion as to whether the Risk Retention Act should be expanded to permit RRGs to provide property insurance?

	1.	Yes, the Act should be expanded
	2.	No, the Act should not be expanded
	3.	No opinion
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34a.	Please explain or elaborate on your answer to question 34 here.

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35.	What is your state's opinion as to whether the federal government should have the primary role for arbitrating disputes between states and RRGs?

	1.	Yes, the federal government should have this role
	2.	No, the federal government should not have this role
	3.	No opinion
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35a.	Please explain or elaborate on your answer to question 35 here.

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36.	If the federal government were to assume the role of arbitrating disputes between states and RRGs, which department/agency should have this authority?

	1.	The Department of Commerce
	2.	The Department of Treasury
	3.	Federal Insurance Office (under the Dodd-Frank Act)
	4.	Other (Please specify the department/agency below)
	5.	No opinion
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	If other, please specify here.

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36a.	Please explain or elaborate on your answer to question 36 here.

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37.	In your opinion, how adequate or inadequate are the regulatory protections or safeguards built into the Risk Retention Act?

	1.	Very adequate
	2.	Adequate
	3.	Neither adequate nor inadequate
	4.	Inadequate
	5.	Very inadequate
	6.	No opinion
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37a.	Please explain or elaborate on your answer to question 37 here.

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38.	Does your state have an opinion as to whether the Risk Retention Act should be clarified or amended in any way?

	1.	Yes
	2.	No
	3.	No opinion
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38a.	Please explain or elaborate on your answer to question 38 here.

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39.	If you have any comments related to Section V, please write them here:

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40.	Please provide the name, title, phone number, and email address of the primary point of contact if we have follow up questions regarding the survey responses.

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	Name (View responses)
	Title (View responses)
	Phone (View responses)
	E-mail address (View responses)