2019 District of Columbia Code
Title 31 - Insurance and Securities.
Chapter 41 - Risk Retention.
§ 31–4101. Definitions.

For the purposes of this chapter, the term:

(1) “Commissioner” means the Commissioner of the Department of Insurance, Securities, and Banking, or the commissioner, director, or superintendent of insurance in any other state.

(A) Any person who performs that work; or

(B) Any person who hires an independent contractor to perform that work, but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability.

(1A) “Completed operations liability” means liability arising out of installation, maintenance, or repair of any product at a site which is not owned or controlled by:

(2) “District” means the District of Columbia.

(3) “Domicile”, for purposes of determining the state in which a purchasing group is domiciled, means:

(A) For a corporation, the state in which the purchasing group is incorporated; and

(B) For an unincorporated entity, the state of its principal place of business.

(4) “Hazardous financial condition” means that, based on its present reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able to:

(A) Meet obligations to policyholders with respect to known claims and reasonably anticipated claims;

(B) Pay other obligations in the normal course of business; or

(C) Meet the minimum capital and surplus requirements of licensed property and casualty insurance companies.

(5) “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 the laws of the District.

(6) “Liability” 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 other persons resulting from or arising out of any business (whether profit or nonprofit), trade, product, services (including professional services), premises, or operations, or any activity of any state or local government, or any agency or political subdivision thereof. The term “liability” 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.).

(7) “NAIC” means National Association of Insurance Commissioners.

(8) “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 paragraph (10) of this section.

(9) “Plan of operation or a feasibility study” means an analysis which presents the expected activities and results of a risk retention group including, at a minimum:

(A) Information sufficient to verify that its members are engaged in businesses or activities similar or related with respect to the liability to which the members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;

(B) For each state in which it intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer;

(C) Historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available;

(D) Pro forma financial statements and projections;

(E) Appropriate opinions by a qualified, independent casualty actuary including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;

(F) Identification of management, underwriting, and claims procedures marketing methods, managerial oversight methods, investment policies, and reinsurance agreements;

(G) Identification of each state in which the risk retention group has obtained, or sought to obtain, a charter and license, and a description of its status in each state; and

(H) Other matters as may be prescribed by the insurance commissioner of the jurisdiction in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that jurisdiction.

(10) “Product liability” means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of the person when the incident giving rise to the claim occurred.

(11) “Purchasing group” means any group which:

(A) Has as one of its purposes the purchase of liability insurance on a group basis;

(B) Purchases liability insurance only for its group members and only to cover their similar or related liability exposure, as described in subparagraph (C) of this paragraph;

(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.

(12) “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) of this paragraph;

(C) Which is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or which, 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 that date, had certified to the insurance commissioner of at least 1 state that it satisfied the capitalization requirements of that state, except that any group shall be considered a risk retention group only if it has been engaged in business continuously since that date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability, as these terms were defined in the federal Product Liability Risk Retention Act of 1981, approved September 25, 1981 (95 Stat. 949; 15 U.S.C. § 3901 et seq.), before the date of the enactment of the Liability Risk Retention Act of 1986, approved October 27, 1986 (100 Stat. 3170; 15 U.S.C. § 3901 et seq.);

(D) Repealed.

(E) Which does not exclude any person from membership in the group solely to provide members of the group a competitive advantage over that person;

(F) Which has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by the group, or has as its sole owner an organization which has as its members only persons who comprise the membership of the risk retention group, and as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by the group;

(G) Whose members are engaged in businesses or activities similar or related with respect to the liability of which the members are exposed by virtue of any related, similar, or common business trade, product, services, premises, or operations;

(H) Whose activities do not include the provision of insurance other than:

(i) Liability insurance for assuming and spreading all or any portion of the liability of its group members; and

(ii) Reinsurance with respect to the liability of any other risk retention group, or any members of the other group, which is engaged in business or activities so that the group or a member meets the requirement described in paragraph (9)(G) of this section from membership in the risk retention group which provides the reinsurance; and

(I) The name of which includes the phrase “Risk Retention Group”.

(13) “State” means any state of the United States or the District of Columbia.

(14) Repealed.

(Oct. 21, 1993, D.C. Law 10-46, § 2, 40 DCR 6082; Apr. 26, 1994, D.C. Law 10-103, § 4(a), 41 DCR 1005; Feb. 27, 1996, D.C. Law 11-90, §§ 3(a)-(c), 42 DCR 7155; May 21, 1997, D.C. Law 11-268, § 10(aa)(1), 44 DCR 1730; Mar. 24, 1998, D.C. Law 12-81, § 38(a), 45 DCR 745; June 11, 2004, D.C. Law 15-166, § 4(z), 51 DCR 2817.)

1981 Ed., § 35-2901.

This section is referenced in § 31-401, § 31-751, § 31-3931.01, § 31-3931.12, § 31-4103, and § 31-4107.

D.C. Law 15-166, in par. (1), substituted “Commissioner of the Department of Insurance, Securities, and Banking” for “Commissioner of Insurance and Securities”.

Reciprocal insurance company to include interinsurance exchange but not risk retention group, see § 31-751.

For temporary amendment of section, see § 3(a) through (c) of the Insurance Omnibus Emergency Amendment Act of 1995 (D.C. Act 11-48, May 15, 1995, 42 DCR 2544) and § 3(a) through (c) of the Insurance Omnibus Congressional Recess Emergency Amendment Act of 1995 (D.C. Act 11-97, July 19, 1995, 42 DCR 3844).

For temporary (90 day) amendment of section, see § 4(z) of Consolidation of Financial Services Emergency Amendment Act of 2004 (D.C. Act 15-381, February 27, 2004, 51 DCR 2653).

For temporary (225 day) amendment of section, see § 4(a) of Insurance Omnibus Temporary Amendment Act of 1993 (D.C. Law 10-76, March 17, 1994, law notification 41 DCR 1626).

For temporary (225 day) amendment of section, see § 3(a)-(c) of Insurance Omnibus Temporary Amendment Act of 1995 (D.C. Law 11-36, September 8, 1995, law notification 42 DCR 5305).

Mayor authorized to issue rules: Section 14 of D.C. Law 10-46 provided that the Mayor shall, pursuant to subchapter I of Chapter 15 of Title 1 subchapter I of Chapter 5 of Title 2, 2001 Ed., issue rules to implement the provisions of this chapter.

Delegation of authority pursuant to D.C. Law 10-46, the Risk Retention Act of 1993, see Mayor’s Order 94-54, March 7, 1994 ( 41 DCR 1433).