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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.
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