§431K-1  Definitions.  As used in thischapter:

"Commissioner" means the insurancecommissioner of this State.

"Completed operations liability"means liability arising out of the installation, maintenance, or repair of anyproduct at a site which is not owned or controlled by any person who:

(1)  Performs that work; or

(2)  Hires an independent contractor to perform thatwork; but shall include liability for activities which are completed orabandoned before the date of the occurrence giving rise to the liability.

"Domicile", for purposes ofdetermining the state in which a purchasing group is domiciled, means:

(1)  For a corporation, the state in which thepurchasing group is incorporated; or

(2)  For an unincorporated entity, the state of itsprincipal place of business.

"Financially impaired" means that arisk retention group:

(1)  Has admitted assets that are less than the sum ofits aggregate liabilities and the amount of surplus to policyholders requiredto be maintained by a risk retention group chartered in this State andauthorized to do the same kind or kinds of insurance; or

(2)  Has admitted assets that are less than the sum ofits aggregate liabilities and outstanding capital stock; or

(3)  Is insolvent.

"Hazardous financial condition" meansthat, based on its present or reasonably anticipated financial condition, arisk retention group, although not yet financially impaired or insolvent, isunlikely 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.

"Insolvent" means that a riskretention group has admitted assets that are less than the aggregate amount ofits liabilities.

"Insurance" means primary insurance,excess insurance, reinsurance, surplus lines insurance, and any otherarrangement for shifting and distributing risk which is determined to beinsurance under the laws of this State.

"Liability" means legal liability fordamages, including costs of defense, legal costs and fees, and other claimsexpenses because of injuries to other persons, damage to their property, orother damage or loss to those other persons resulting from or arising out of:

(1)  Any business, whether for profit or nonprofit,trade, product, services, including professional services, premises, oroperations; or

(2)  Any activity of any state or county government,or any agency or political subdivision;

but does not include personal risk liability and anemployer's liability with respect to its employees other than legal liabilityunder the Federal Employers' Liability Act, 45 U.S.C. §51 et seq.

"Personal risk liability" meansliability for damages because of injury to any person, damage to property, orother loss or damage resulting from any personal, familial, or householdresponsibilities or activities, rather than from responsibilities or activitiesreferred to in paragraphs (1) and (2) in the definition of"liability".

"Plan of operation" or"feasibility study" means an analysis which presents the expectedactivities and results of a risk retention group including, not less than thefollowing:

(1)  The coverages, deductibles, coverage limits,rates, and rating classification systems 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 premiums orparticipation levels required to commence operations and to prevent a hazardousfinancial condition;

(5)  Identification of management, underwritingprocedures, managerial oversight methods, investment policies;

(6)  Identification of each state in which the riskretention group has obtained, or sought to obtain, a charter and license, and adescription of its status in each state; and

(7)  Other matters as may be prescribed by thecommissioner for liability insurance companies authorized by the insurance lawsof the state in which the risk retention group is chartered.

"Product liability" means liabilityfor damages because of any personal injury, death, emotional harm,consequential economic damage, or property damage, including damages resultingfrom 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 theproduct involved was in the possession of the person when the incident givingrise to the claim occurred.

"Purchasing group" means any groupwhich:

(1)  Has as one of its purposes the purchase of liabilityinsurance on a group basis;

(2)  Purchases this insurance only for its groupmembers and only to cover their similar or related liability exposure, asdescribed in [paragraph (3)];

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

(4)  Is domiciled in any state.

"Risk retention group" means anycorporation or other limited liability association formed under the laws of anystate, Bermuda, or the Cayman Islands:

(1)  Whose primary activity consists of assuming andspreading all, or any portion, of the liability exposure of its group members;

(2)  Which is organized for the primary purpose ofconducting the activity described under paragraph (1);

(3)  Which:

(A)  Is chartered and licensed as a liabilityinsurance company and authorized to engage in the business of insurance underthe laws of any state; or

(B)  Before January 1, 1985, was chartered orlicensed and authorized to engage in the business of insurance under the lawsof Bermuda or the Cayman Islands and, before this date, had certified to theinsurance commissioner of at least one state that it satisfied thecapitalization requirements of that state, except that any group shall beconsidered to be a risk retention group only if the group has been engaged inbusiness continuously since this date and only for the purpose of continuing toprovide insurance to cover product liability or completed operations liability,as defined in the Product Liability Risk Retention Act of 1981, 15 U.S.C. §3901et seq., before the date of the enactment of the Liability Risk Retention Actof 1986, P.L. 99-563;

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

(5)  Which has as its:

(A)  Members only persons who have an ownershipinterest in the group and that has as its owners only persons who are memberswho are provided insurance by the risk retention group; or

(B)  Sole member and sole owner an organizationthat is owned by persons who are provided insurance by the risk retentiongroup;

(6)  Whose members are engaged in business oractivities similar or related to the liability of which these members 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 andspreading all or any portion of the liability for its group members; and

(B)  Reinsurance with respect to the liabilityof any other risk retention group, or any members of another group, which isengaged in businesses or activities so that this group or member meets therequirement described in paragraph (6) for membership in the risk retentiongroup that provides this reinsurance; and

(8)  The name of which includes the phrase "riskretention group".

"State" means any state of the UnitedStates or the District of Columbia. [L 1987, c 180, pt of §1; am L 1989, c 272,§§2, 3; am L 1997, c 368, §8; am L 2004, c 122, §80]