NRRA Opposes Florida Bill It Says Would "Discriminate" Against RRGs

The National Risk Retention Association (NRRA) is opposing a Florida bill that would revise the state's motor vehicle law in a way the association says would "discriminate" against risk retention groups (RRGs) writing commercial auto coverage in Florida.

According to the NRRA, the bill, SB 516, would require that any RRG writing the coverage in the state possess at least an A.M. Best "A" rating. In addition, such RRGs would be required to have a minimum Best financial size category of "VIII," meaning $100 million to $250 million in capital surplus, in order to conduct business in Florida.

The bill is currently making its way through Florida Senate committees. The Senate Banking & Insurance Committee passed an amended version of the bill unanimously on March 22. The bill has now been assigned to the Senate Appropriations Committee on Criminal and Civil Justice, the NRRA said.

In a statement, Joseph E. Deems, executive director of the NRRA, described the group's opposition to the bill as "extensive and vigorous thus far." In a March letter to Florida Senator Doug Broxson, Mr. Deems further detailed his organization's opposition to SB 516.

"SB 516 will have a serious negative effect on virtually all of the risk retention groups currently writing commercial auto coverage in Florida and their Florida policyholders and will most certainly have a direct and damaging impact for the Florida commercial auto insurance market as a whole," Mr. Deems wrote. "Without a doubt, SB 516 will diminish competition in Florida's commercial auto insurance market and will cause most Floridians who need that coverage to pay much higher premiums."

Mr. Deems's letter also suggests that the Florida measure would violate the federal Liability Risk Retention Act of 1986, which enabled the formation of RRGs.