NAMIC Urges Congress to Respect States on Insurance Regulation

Congress should avoid legislation that could distort state insurance marketplaces and weaken consumer protections, the National Association of Mutual Insurance Companies said today.

H.R. 4523, the Nonprofit Property Protection Act, would allow risk retention groups, known as RRGs, to offer property coverage, including auto insurance, to 501(c)(3) non-profit organizations, in competition with admitted insurers that are subject to the regulations of each state in which they offer coverage.

RRGs were created to address an availability crisis for liability insurance in the 1980s. Though similar to non-profit mutual insurance companies in structure, RRGs can operate in multiple states while only being subject to the regulation of the state in which they are domiciled, and they do not participate in state guaranty funds.

Jon Bergner, assistant vice president for public policy and federal affairs for NAMIC, appeared as the only witness testifying on behalf of the property/casualty insurance industry at a hearing of the House Financial Services Subcommittee on Housing, Insurance, and Community Development. In his testimony, Bergner said that no similar crisis exists currently in the availability for property coverage, and lawmakers should be wary of making changes to state-based insurance regulation.

“Allowing RRGs to sell the same commercial insurance products already offered in the admitted markets simply gives them an unfair competitive advantage over traditional insurance companies that abide by all the regulatory standards and consumer protections of each state in which they operate,” he testified. The RRG structure, he further explained, “was specifically designed to deal with a widely recognized crisis in commercial liability insurance markets in the 1980s. No such crisis exists today in the commercial property market.”

Also testifying in opposition to the bill was Chlora Lindley-Myers, director of the Missouri Department of Commerce and Insurance and an officer in the National Association of Insurance Commissioners. Bergner urged subcommittee members to note the opposition of primary insurers, independent insurance agents, and regulators to the legislation.

“If RRGs want to offer the same products as admitted insurers, they should play by the same rules,” Bergner concluded. “There was nothing novel about the structure of RRGs when they were created. The concept of an insurer that is owned and managed by and for the benefit of its policyholding members has been around since the first successful U.S. mutual insurance company was founded by Benjamin Franklin in 1752 and continues to serve policyholders across America today.”

Article Posted: 01.29.20
Last Updated: 08.21.20


Matt Brady
Senior Director of Advocacy Communications