Sec 20-2403. Risk retention groups not chartered and licensed in this state

A. Before offering insurance in this state, a risk retention group shall submit to the director all of the following:

1. Evidence that the group meets the criteria of a risk retention group.

2. A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, the date of chartering and its principal place of business.

3. A copy of its plan of operations or a feasibility study and revisions of the plan or study submitted to its state of domicile.

4. A statement of registration which designates the director as its agent for the purpose of receiving service of legal documents or process. The director shall determine the filing fee for the statement of registration.

B. A risk retention group doing business in this state shall submit to the director all of the following:

1. A copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed, which is certified by an independent public accountant and contains a statement of opinion on loss and loss adjustment expense reserves made by a member of the American academy of actuaries or a qualified loss reserve specialist under criteria established by the director.

2. A copy of each examination of the risk retention group as certified by the director or public official conducting the examination.

3. On request by the director, a copy of any audit performed with respect to the risk retention group.

4. Information required to verify it continues to meet the criteria as a risk retention group under section 20-2401, paragraph 10.

C. Each risk retention group is liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located in this state and shall report to the director the net premiums written for risks resident or located in this state. The risk retention group is subject to taxation and any applicable fines and penalties related to the taxation on the same basis as a foreign admitted insurer. To the extent licensed insurance producers are used pursuant to this chapter, they shall report to the director the premiums for direct business for risks resident or located in this state which the licensees have placed with or on behalf of a risk retention group which is not chartered and licensed in this state. To the extent that insurance producers are used pursuant to this chapter, the insurance producer shall keep a complete and separate record of all policies procured from each risk retention group. The record shall be open to examination by the director. These records, for each policy and each kind of insurance provided under each policy, shall include all of the following:

1. The limit of liability.

2. The time period covered.

3. The effective date.

4. The name of the risk retention group which issued the policy.

5. The gross premium charged.

6. The amount of return premium, if any.

D. A risk retention group and its agents and representatives shall comply with section 20-461 pertaining to unfair claims settlement practices.

E. A risk retention group shall comply with chapter 2, article 6 of this title. However, if the director seeks an injunction regarding such conduct, the injunction shall be obtained from a court of competent jurisdiction.

F. A risk retention group shall submit to an examination by the director to determine its financial condition if the director of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within sixty days after a request by the director of this state. Any examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with rules established by the director.

G. A policy issued by a risk retention group shall contain in ten point type on the front page and the declaration page the following notice:

Notice

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

H. The following acts by a risk retention group are prohibited:

1. The solicitation or sale of insurance by a risk retention group to a person who is not eligible for membership in the group.

2. The solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.

I. No risk retention group may do business in this state if an insurance company is directly or indirectly a member or owner of the risk retention group, other than a risk retention group whose members are insurance companies.

J. A risk retention group which is not chartered and licensed in this state and is doing business in this state must comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance director if there has been a finding of financial impairment after an examination under subsection F of this section.

K. The director, in establishing criteria for loss and loss adjustment reserves under subsection B, paragraph 1 of this section and in conducting examinations under subsection F of this section, for purposes of uniformity, shall consider any nationally adopted criteria or procedure.

L. In addition to complying with the requirements of this section applicable to risk retention groups doing business in this state, any risk retention group operating in this state before August 18, 1987 shall comply with subsection A of this section within thirty days after August 18, 1987.

M. A risk retention group which violates any provision of this chapter is subject to fines and penalties applicable to licensed insurers generally, including revocation of its license or the right to do business in this state.