2005 Nevada Revised Statutes - Chapter 695E — Liability Risk Retention

CHAPTER 695E - LIABILITY RISK RETENTION

GENERAL PROVISIONS

NRS 695E.010 Statementof purpose.

NRS 695E.020 Definitions.

NRS 695E.030 Completedoperations liability defined.

NRS 695E.040 Domiciledefined.

NRS 695E.050 Hazardousfinancial condition defined.

NRS 695E.060 Liabilitydefined.

NRS 695E.070 Personalrisk liability defined.

NRS 695E.080 Planof operation defined.

NRS 695E.090 Productliability defined.

NRS 695E.100 Purchasinggroup defined.

NRS 695E.110 Riskretention group defined.

PURCHASING GROUPS

NRS 695E.120 Requirements.

NRS 695E.125 Notificationof change in information provided to Commissioner.

NRS 695E.130 Purchaseof insurance; exemption from certain laws.

NRS 695E.135 Extentof liability for payment of premium tax.

RISK RETENTION GROUPS

NRS 695E.140 Requirements.

NRS 695E.150 Identifyingstatement; plan of operation; Commissioner to serve as agent for service ofprocess; filing fee.

NRS 695E.160 Submissionof financial statement, examinations, audits and other information.

NRS 695E.170 Applicabilityof other provisions.

NRS 695E.180 Noticerequired in policy.

NRS 695E.190 Examinationby Commissioner; compliance with order of Commissioner; enforcement of orderissued by federal court.

NRS 695E.200 Prohibitedacts.

MISCELLANEOUS PROVISIONS

NRS 695E.210 Applicabilityof other provisions; fines and penalties for violation of chapter.

NRS 695E.220 Annualnotice of intent to continue doing business in Nevada.

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GENERAL PROVISIONS

NRS 695E.010 Statementof purpose. The purpose of this chapter is toregulate the formation and operation in this state of organizations formedpursuant to the provisions of the Liability Risk Retention Act of 1986.

(Added to NRS by 1987, 1327)

NRS 695E.020 Definitions. As used in this chapter, the words and terms defined in NRS 695E.030 to 695E.110, inclusive, have the meaningsascribed to them in those sections.

(Added to NRS by 1987, 1327)

NRS 695E.030 Completedoperations liability defined.

1. Completed operations liability means liabilityarising out of the installation, maintenance or repair of any product at a sitethat is not owned or controlled by:

(a) Any person who performs the work; or

(b) Any person who hires an independent contractor toperform the work.

2. The term includes liability for activities that arecompleted or abandoned before the occurrence giving rise to the liability.

(Added to NRS by 1987, 1328)

NRS 695E.040 Domiciledefined. Domicile means:

1. For a corporation, the state in which it isincorporated; and

2. For any other person, the state of his principalplace of business.

(Added to NRS by 1987, 1328)

NRS 695E.050 Hazardousfinancial condition defined. Hazardous financialcondition means that, based on its present or reasonably anticipated financialcondition, a risk retention group, although not yet financially impaired orinsolvent, is unlikely to be able to:

1. Meet obligations to policyholders with respect toknown claims and reasonably anticipated claims; or

2. Pay other obligations in the normal course ofbusiness.

(Added to NRS by 1987, 1328)

NRS 695E.060 Liabilitydefined.

1. Liability means legal liability for damages,including costs of defense, legal costs and fees, and other expenses forclaims, because of injuries to other persons, damage to their property, orother damage or loss to those persons resulting from or arising out of any:

(a) Business, whether or not conducted for profit, orany trade, product, services, whether or not professional, or any premises oroperations; or

(b) Activity of any state or local government, or anyagency or political subdivision thereof.

2. The term does not include personal risk liabilityand an employers liability concerning its employees, other than legalliability under the Federal Employers Liability Act.

(Added to NRS by 1987, 1328)

NRS 695E.070 Personalrisk liability defined. Personal riskliability means liability for damages because of injury to any person, damageto property, or other loss or damage resulting from any personal, familial orhousehold responsibilities or activities.

(Added to NRS by 1987, 1328)

NRS 695E.080 Planof operation defined. Plan of operationmeans an analysis of the expected activities and results of a risk retentiongroup, including:

1. The coverages, deductibles, limits of coverage,rates and systems of rating classification for each line of insurance the groupintends to offer;

2. Historical and expected loss experience of theproposed members, and national experience of similar exposures to the extentthat this experience is reasonably available;

3. Pro forma financial statements and projections;

4. Appropriate opinions by a qualified, independentcasualty actuary, including a determination of minimum premium or participationlevels required to commence operations and to prevent a hazardous financialcondition;

5. Identification of management, underwritingprocedures, policies for investment and methods for managerial oversight; and

6. Such other matters as are prescribed by the Commissionerfor liability insurers authorized by the insurance laws of the state in whichthe risk retention group is chartered.

(Added to NRS by 1987, 1328)

NRS 695E.090 Productliability defined. Product liability meansliability for damages because of any personal injury, death, emotional harm,consequential economic damage or damage to property, including damagesresulting from the loss of use of property, arising out of the manufacture,design, importation, distribution, packaging, labeling, lease or sale of aproduct, but does not include the liability of any person for those damages ifthe product involved was in the possession of that person when the incidentgiving rise to the claim occurred.

(Added to NRS by 1987, 1329)

NRS 695E.100 Purchasinggroup defined. Purchasing group means anygroup which:

1. Has as one of its purposes the purchase ofliability insurance on a group basis;

2. Purchases such insurance only for its members andonly to cover their similar or related exposure to liability, as described insubsection 3;

3. Is composed of members whose businesses oractivities are similar or related with respect to the liability to which theyare exposed by virtue of any related, similar or common business, trade,product, services, premises or operations; and

4. Is domiciled in any state.

(Added to NRS by 1987, 1329)

NRS 695E.110 Riskretention group defined. Risk retentiongroup means any corporation or association with limited liability that isformed under the laws of any state, Bermuda or the Cayman Islands:

1. Whose primary activity consists of assuming andspreading all or any portion of the exposure of its members to liability;

2. Which is organized primarily to conduct theactivity described in subsection 1;

3. Which:

(a) Is chartered and licensed as a liability insurerand authorized to transact insurance under the laws of any state; or

(b) Before January 1, 1985, was chartered or licensedand authorized to transact insurance under the laws of Bermuda or the CaymanIslands and, before that date, had certified to the Commissioner of Insuranceof at least one state that it satisfied the states requirements forcapitalization, except that such a group is considered to be a risk retention grouponly if it has been engaged in business continuously since that date and onlyfor the purpose of continuing to provide insurance to cover product liabilityor completed operations liability;

4. Which does not exclude any person from membershipin the group solely to provide for members of the group a competitive advantageover an excluded person;

5. Which has as its:

(a) Members only persons who have an ownership interestin the group and who are provided insurance by the risk retention group; or

(b) Sole owner an organization which has as its:

(1) Members only persons who comprise themembership of the risk retention group; and

(2) Owners only persons who comprise themembership of the risk retention group and who are provided insurance by thegroup;

6. Whose members are engaged in businesses oractivities similar or related with respect to the liability to which they areexposed by virtue of any related, similar or common business, trade, product,services, premises or operations;

7. Whose activities do not include the provision ofinsurance other than:

(a) Liability insurance for assuming and spreading allor any portion of the liability of the members of the group; and

(b) Reinsurance with respect to the liability of anyother risk retention group, or any member of such a group, that is engaged in abusiness or activity such that the other group or member meets the requirementsof subsection 6 for membership in the risk retention group that providesreinsurance; and

8. The name of which includes the phrase riskretention group.

(Added to NRS by 1987, 1329; A 1995, 1780)

PURCHASING GROUPS

NRS 695E.120 Requirements. A purchasing group that intends to conduct business inthis state shall register with the Commissioner and:

1. Furnish notice to the Commissioner that:

(a) Identifies the state in which the group isdomiciled;

(b) Specifies the lines and classifications ofliability insurance that the purchasing group intends to purchase;

(c) Identifies the insurer from which the group intendsto purchase its insurance and the domicile of the insurer;

(d) Identifies the principal place of business of thegroup;

(e) Identifies all other states in which the groupintends to do business; and

(f) Provides such other information as the Commissionerrequires to verify and determine:

(1) Its qualification as a purchasing group;

(2) Where the purchasing group is located; and

(3) The appropriate tax treatment of thepurchasing group; and

2. Appoint the Commissioner as its agent solely toreceive service of legal process, and pay the fee for filing a power ofattorney required by subsection 4 of NRS680B.010, except that this subsection does not apply to a purchasing groupthat:

(a) Was domiciled before April 1, 1986, and on andafter October 27, 1986, in any state;

(b) Before and after October 27, 1986, purchased itsinsurance from an insurer licensed in any state;

(c) Was a purchasing group under the requirements ofthe Product Liability Risk Retention Act of 1981 before October 27, 1986; and

(d) Does not purchase insurance that was not authorizedfor an exemption under that act, as in effect before October 27, 1986.

(Added to NRS by 1987, 1330; A 1995, 1781)

NRS 695E.125 Notificationof change in information provided to Commissioner. Apurchasing group shall notify the Commissioner of any change in any of theinformation required pursuant to subsection 1 of NRS 695E.120, within 10 days after theinformation ceases to be accurate.

(Added to NRS by 1995, 1780)

NRS 695E.130 Purchaseof insurance; exemption from certain laws.

1. Except as otherwise provided in chapter 685A of NRS, a purchasing group shallnot purchase insurance from an unauthorized insurer or a risk retention groupthat is not chartered or registered in this state.

2. A purchasing group is exempt from any law of thisstate that relates to the formation or prohibition of groups for the purchaseof insurance, and any law that would discriminate against a purchasing group orits members.

3. An insurer is exempt from any law of this statethat prohibits providing, or offering to provide, to a purchasing group or itsmembers advantages based on their loss and expense experiences not afforded toother persons with respect to rates, policy forms, coverages or other matters.

4. A purchasing group and its insurer are exempt fromany law of this state which requires that an insurance policy issued to apurchasing group or any of its members be countersigned by an insurance agentresiding in this state.

5. A purchasing group that obtains liability insurancefrom a surplus lines insurer or a risk retention group shall inform each of themembers of the purchasing group which have a risk resident or located in thisstate that the risk is not protected by an insurance insolvency guaranty fundin this state, and that the risk retention group or insurer may not be subjectto all insurance laws and regulations of this state.

6. No purchasing group may purchase insuranceproviding for a deductible or self-insured retention applicable to the group asa whole, but the coverage may provide for a deductible or self-insuredretention applicable to individual members of the group.

7. Purchases of insurance by purchasing groups aresubject to the same standards regarding aggregate limits which are applicableto all purchases of group insurance.

(Added to NRS by 1987, 1330; A 1995, 1782)

NRS 695E.135 Extentof liability for payment of premium tax. Allpremiums paid by a purchasing group or any member of the purchasing group forinsurance on risks resident, located or to be performed in this state aresubject to the payment of premium taxes and any related fines or penaltiespursuant to chapters 680A, 680B and 685Aof NRS. To the extent that premiums are paid by a purchasing group or anymember of the purchasing group:

1. To an authorized insurer, the insurer shall pay thepremium taxes and any related fines or penalties pursuant to chapters 680A and 680Bof NRS;

2. To a surplus lines broker for insurance procured assurplus lines coverage, the surplus lines broker shall pay the premium taxesand any related fines or penalties pursuant to chapter685A of NRS; or

3. To an unauthorized insurer for insuranceindependently procured by the purchasing group or any member of the group,premium taxes and any related fines and penalties are payable first by thepurchasing group, and if not paid by the purchasing group, then by each of itsmembers, pursuant to NRS 680B.040.

(Added to NRS by 1995, 1780)

RISK RETENTION GROUPS

NRS 695E.140 Requirements.

1. A risk retention group seeking to be chartered inthis State must obtain a certificate of authority pursuant to chapter 694C of NRS to transact liability insuranceand, except as otherwise provided in this chapter, must comply with:

(a) All of the laws, regulations and requirementsapplicable to liability insurers in this State; and

(b) The provisions of NRS 695E.150 to 695E.210, inclusive, to the extent thatthose provisions do not limit or conflict with the provisions with which thegroup is required to comply pursuant to paragraph (a).

2. Before it may transact insurance in any state, therisk retention group must submit to the Commissioner for his approval a plan ofoperation. The risk retention group shall submit an appropriate revision in theevent of any subsequent material change in any item of the plan of operationwithin 10 days after the change. The group shall not offer any additional kindsof liability insurance, in this State or in any other state, until a revisionof the plan is approved by the Commissioner.

3. A risk retention group chartered in a state otherthan Nevada that is seeking to transact insurance as a risk retention group inthis State must comply with the provisions of NRS 695E.150 to 695E.210, inclusive.

(Added to NRS by 1987, 1330; A 1995, 1782; 2005, 2158)

NRS 695E.150 Identifyingstatement; plan of operation; Commissioner to serve as agent for service ofprocess; filing fee. Before transactinginsurance in this state, a risk retention group must submit to theCommissioner:

1. A statement of registration identifying:

(a) Each state in which the risk retention group ischartered or licensed as a liability insurer;

(b) The date of its charter;

(c) Its principal place of business; and

(d) Such other information, including informationconcerning its membership, as the Commissioner requires to verify itsqualification as a risk retention group;

2. A copy of its plan of operation and any revisionsof the plan submitted to its state of domicile, except with respect to any lineor classification of liability that was:

(a) Defined in the Product Liability Risk Retention Actof 1981 before October 27, 1986; and

(b) Offered before that date by a risk retention groupthat had been chartered and operating for not less than 3 years before thatdate; and

3. A statement appointing the Commissioner as itsagent for service of process pursuant to NRS680A.250, together with the fee for filing a power of attorney required bysubsection 4 of NRS 680B.010.

(Added to NRS by 1987, 1331; A 1995, 1783)

NRS 695E.160 Submissionof financial statement, examinations, audits and other information. A risk retention group transacting insurance in this stateshall submit to the Commissioner:

1. A copy of the groups financial statement submittedto its state of domicile, which must be certified by an independent publicaccountant and contain a statement of opinion on its reserves for loss andexpenses of loss adjustment made by a member of the American Academy ofActuaries or another qualified specialist in reserves for loss;

2. A copy of each examination of the risk retentiongroup, certified by the Commissioner or other public officer conducting theexamination;

3. Upon the request of the Commissioner, a copy of anyaudit performed with respect to the risk retention group; and

4. Such other information as the Commissioner requiresto verify its continuing qualification as a risk retention group.

(Added to NRS by 1987, 1331)

NRS 695E.170 Applicabilityof other provisions.

1. A risk retention group and its agents andrepresentatives are subject to the provisions of NRS 686A.010 to 686A.310, inclusive. Any injunctionobtained pursuant to those sections must be obtained from a court of competentjurisdiction.

2. All premiums paid for coverages within this stateto a risk retention group are subject to the provisions of chapter 680B of NRS. Each risk retention groupshall report all premiums paid to it and shall pay the taxes on premiums andany related fines or penalties for risks resident, located or to be performedin the state.

(Added to NRS by 1987, 1331; A 1995, 1633, 1783;1997, 549)

NRS 695E.180 Noticerequired in policy. A policy issued by a riskretention group must contain in 10-point type on the front page and thedeclaration page, the following notice:

 

NOTICE

 

This policy is issued by yourrisk retention group. Your risk retention group may not be subject to all ofthe insurance laws and regulations of your state. State insolvency guarantyfunds are not available for your risk retention group.

 

(Added to NRS by 1987, 1332)

NRS 695E.190 Examinationby Commissioner; compliance with order of Commissioner; enforcement of orderissued by federal court.

1. A risk retention group shall submit to anexamination by the Commissioner to determine its financial condition if thecommissioner of insurance of the jurisdiction in which the group is chartereddoes not initiate such an examination within 60 days after a request by theCommissioner of Insurance of this state. The examination must be coordinated toavoid unjustified repetition and conducted in an expeditious manner. TheCommissioner shall give due consideration to the procedure outlined in thehandbook for examiners sponsored by the National Association of InsuranceCommissioners.

2. A risk retention group not chartered in this stateand doing business in this state shall comply with a lawful order issued in aproceeding for voluntary dissolution or in a delinquency proceeding commencedby a commissioner of insurance of any state if there has been a finding offinancial impairment after an examination conducted pursuant to subsection 1.

3. An order issued by a District Court of the UnitedStates, entered upon a finding that a risk retention group is in a hazardousfinancial condition, that enjoins the group from conducting operations ortransacting insurance in any state, must be enforced by the district courts ofthis state.

(Added to NRS by 1987, 1332)

NRS 695E.200 Prohibitedacts. A risk retention group shall not:

1. Transact insurance with any person who is noteligible for membership in the risk retention group;

2. Conduct any business in this state if an insurer isdirectly or indirectly a member or owner of the group, unless all the membersof the group are insurers;

3. Transact insurance or otherwise operate whilefinancially impaired or in a hazardous financial condition;

4. Issue any insurance policy with terms providing, orwhich have been construed as providing, coverage prohibited by a specificstatute of this state or declared unlawful by the highest court of this statewhich has rendered a judgment concerning the legality of that coverage; or

5. Join or contribute financially to the NevadaInsurance Guaranty Association, or to any similar organization or fund in thisstate, and the provisions of chapter 687A ofNRS do not apply to a risk retention group. A risk retention group and itsinsureds shall not accept any benefit from such an organization or fund forclaims arising out of the operation of the risk retention group.

(Added to NRS by 1987, 1332; A 1995, 1783)

MISCELLANEOUS PROVISIONS

NRS 695E.210 Applicabilityof other provisions; fines and penalties for violation of chapter.

1. Any person acting, or offering to act, as an agentor broker for a purchasing group, a member of a purchasing group under thegroup policy, or a risk retention group transacting insurance in this state issubject to the provisions of chapters 683Aand 685A of NRS.

2. Except as otherwise provided in this chapter, theprovisions of chapter 679B of NRS apply topurchasing groups and risk retention groups, and to the provisions of thischapter, to the extent that the provisions of chapter679B of NRS are not specifically preempted by the Product Liability RiskRetention Act of 1981, as amended by the Risk Retention Amendments of 1986.

3. A risk retention group that violates any provisionof this chapter is subject to the fines and penalties, including revocation ofits right to do business in this state, applicable to licensed insurers underthis title.

(Added to NRS by 1987, 1333; A 1995, 1784)

NRS 695E.220 Annualnotice of intent to continue doing business in Nevada.On or before March 1 of each year, a purchasing group and a riskretention group shall submit to the Commissioner a written notice of itsintention to continue doing business in Nevada.

(Added to NRS by 1991, 2037)

 

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