20-2403

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.