Download as PDF
304.45-020 Definitions for subtitle.
As used in this subtitle:
(1) "Commissioner" means the commissioner of the Kentucky Department of
Insurance or the insurance supervisor of another state;
(2) "Completed operations liability" means liability arising out of the installation,
maintenance, or repair of any product at a site which is not owned or controlled
by:
(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;
(3) "Domicile," for the 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 a condition in which, based on its
present or reasonably anticipated financial condition, a risk retention group,
although not yet financially impaired or insolvent, 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;
(5) "Insurance" means primary insurance, excess insurance, reinsurance, surplus
lines insurance, and any other arrangement for shifting and distributing risks
which is determined to be insurance under the laws of this state;
(6) "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:
1.
Any business (whether profit or nonprofit), trade, product, services
(including professional services), premises, or operations; or
2.
Any activity of any state or local government, or any agency or
political subdivision thereof; but
(b) Does not include personal risk liability or an employer's liability with
respect to its employees other than legal liability under the Federal
Employers' Liability Act (45 U.S.C. secs. 51 et seq.);
(7) "Personal risk liability" means liability for damages because of injury to any
person, damage to property, or other loss or damage arising from any
personal, familial, or household responsibilities or activities, rather than from
responsibilities or activities referred to in subsection (6) of this section;
(8) "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 such 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 system for each kind 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 claim procedures,
marketing methods, managerial oversight methods, and investment
policies; and
(g) Such other matters as may be prescribed by the commissioner for liability
insurance companies authorized by the insurance laws of the state in
which the risk retention group is chartered;
(9) "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 such person when
the incident giving rise to the claim occurred;
(10) "Purchasing group" means any group which:
(a) Has as one (1) 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 paragraph (c) of
this subsection;
(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;
(11) "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 paragraph (a) of this subsection;
(c)
Which:
1.
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
2.
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
commissioner of at least one (1) 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
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 under
the Product Liability Risk Retention Act of 1981 prior to the date of
the enactment of the Liability Risk Retention Act of 1986);
(d) Which does not exclude any person from membership in the group solely
to provide for members of such group a competitive advantage over such
person;
(e) Which:
1.
Has as its owners only persons who comprise the membership of
the risk retention group and who are provided insurance by such
group; or
2.
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 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; and
(g) Whose activities do not include the provision of insurance other than:
1.
Liability insurance for assuming and spreading all or any portion of
the liability of its group members; and
2.
Reinsurance with respect to the liability of any other risk retention
group or any members of such other group which is engaged in
businesses or activities so that such group or member meets the
requirement described in paragraph (f) of this subsection from
membership in the risk retention group and which provides such
reinsurance; and
(h) The name of which includes the phrase "risk retention group"; and
(12) "State" means any state of the United States or the District of Columbia.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1573, effective July 15, 2010. -Amended 1990 Ky. Acts ch. 165, sec. 2, effective July 13, 1990. -- Created 1986
Ky. Acts ch. 308, sec. 2, effective July 15, 1986.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.