15 U.S.C. § 3901

Definitions

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(a) As used in this chapter—(1) “insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under applicable State or Federal law;(2) “liability”—(A) means legal liability for damages (including costs of defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of—(i) any business (whether profit or nonprofit), trade, product, services (including professional services), premises, or operations, or(ii) any activity of any State or local government, or any agency or political subdivision thereof; and(B) does not include personal risk liability and an employer’s liability with respect to its employees other than legal liability under the Federal Employers’ Liability Act (45 U.S.C. 51 et seq.);(3) “personal risk liability” means liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in paragraphs (2)(A) and (2)(B);(4) “risk retention group” means any corporation or other limited liability association—(A) whose primary activity consists of assuming, and spreading all, or any portion, of the liability exposure of its group members;(B) which is organized for the primary purpose of conducting the activity described under subparagraph (A);(C) which—(i) is chartered or licensed as a liability insurance company under the laws of a State and authorized to engage in the business of insurance under the laws of such State; or(ii) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one State that it satisfied the capitalization requirements of such State, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in this section before October 27, 1986);(D) which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;(E) which—(i) has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or(ii) has as its sole owner an organization which has as—(I) its members only persons who comprise the membership of the risk retention group; and(II) its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group;(F) whose members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;(G) whose activities do not include the provision of insurance other than—(i) liability insurance for assuming and spreading all or any portion of the similar or related liability exposure of its group members; and(ii) reinsurance with respect to the similar or related liability exposure of any other risk retention group (or any member of such other group) which is engaged in businesses or activities so that such group (or member) meets the requirement described in subparagraph (F) for membership in the risk retention group which provides such reinsurance; and(H) the name of which includes the phrase “Risk Retention Group”.11 So in original. The period probably should be a semicolon.(5) “purchasing group” means any group which—(A) has as one of its purposes the purchase of liability insurance on a group basis;(B) purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in subparagraph (C);(C) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and(D) is domiciled in any State;(6) “State” means any State of the United States or the District of Columbia; and(7) “hazardous financial condition” means that, based on its present or reasonably anticipated financial condition, a risk retention group is unlikely to be able—(A) to meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or(B) to pay other obligations in the normal course of business.(b) Nothing in this chapter shall be construed to affect either the tort law or the law governing the interpretation of insurance contracts of any State, and the definitions of liability, personal risk liability, and insurance under any State law shall not be applied for the purposes of this chapter, including recognition or qualification of risk retention groups or purchasing groups.(Pub. L. 97–45, § 2, Sept. 25, 1981, 95 Stat. 949; Pub. L. 98–193, Dec. 1, 1983, 97 Stat. 1344; Pub. L. 99–563, §§ 3, 4, 12(b), Oct. 27, 1986, 100 Stat. 3170, 3171, 3177.)Editorial NotesReferences in Text

The Federal Employers’ Liability Act (45 U.S.C. 51 et seq.), referred to in subsec. (a)(2)(B), is act Apr. 22, 1908, ch. 149, 35 Stat. 65, which is classified generally to chapter 2 (§ 51 et seq.) of Title 45, Railroads. For complete classification of this Act to the Code, see Short Title note set out under section 51 of Title 45 and Tables.

Codification

October 27, 1986, referred to in subsec. (a)(4)(C)(ii), was in the original “the date of the enactment of the Risk Retention Act of 1986”, which was translated as meaning the date of enactment of the Risk Retention Amendments of 1986 to reflect the probable intent of Congress.

Amendments

1986—Subsec. (a)(1) to (3). Pub. L. 99–563, § 3(a), redesignated par. (2) as (1), added pars. (2) and (3), and struck out former par. (1) defining completed operations liability, and former par. (3) defining product liability.

Subsec. (a)(4). Pub. L. 99–563, § 4(a)(1), struck out “taxable as a corporation, or as an insurance company, formed under the laws of any State, Bermuda, or the Cayman Islands” after “association” in introductory provisions.

Subsec. (a)(4)(A). Pub. L. 99–563, § 4(a)(2), substituted “liability exposure” for “product liability or completed operations liability risk exposure”.

Subsec. (a)(4)(C). Pub. L. 99–563, § 4(a)(3), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: “which is chartered or licensed as an insurance company and authorized to engage in the business of insurance under the laws of any State, or which is so chartered or licensed and authorized before January 1, 1985, under the laws of Bermuda or the Cayman Islands, except that any group so chartered or licensed and authorized under the laws of Bermuda or the Cayman Islands shall be considered to be a risk retention group only after it has certified to the insurance commissioner of at least one State that it satisfies the capitalization requirements of such State;”.

Subsec. (a)(4)(E) to (H). Pub. L. 99–563, § 4(a)(4), added subpars. (E) to (H), and struck out former subpar. (E) which read as follows: “which is composed of member each of whose principal activity consists of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product or products;”.

Subsec. (a)(5). Pub. L. 99–563, § 4(b), amended par. (5) generally. Prior to amendment, par. (5) read as follows: “ ‘purchasing group’ means any group of persons which has as one of its purposes the purchase of product liability or completed operations liability insurance on a group basis;”.

Subsec. (a)(7). Pub. L. 99–563, § 3(b), added par. (7).

Subsec. (b). Pub. L. 99–563, § 12(b), substituted “liability, personal risk liability, and insurance” for “product liability and product liability insurance”.

1983—Subsec. (b). Pub. L. 98–193 substituted provision that nothing in this chapter would be construed to affect either the tort law or the law governing the interpretation of insurance contracts of any State, and that the definitions of product liability and product liability insurance under any State law would not be applied for the purposes of this chapter, including recognition or qualification of risk retention groups or purchasing groups for provision that the definition of product liability in this section would not be construed to affect either the tort law or the law governing the interpretation of insurance contracts of any State.

Statutory Notes and Related SubsidiariesEffective Date of 1986 Amendment; Applicability

Pub. L. 99–563, § 11(a), (b), and (c)(2), Oct. 27, 1986, 100 Stat. 3177, provided that:“(a)General Rule.—Subject to subsection (b), this Act [see Short Title of 1986 Amendment note below] shall take effect on the date of its enactment [Oct. 27, 1986].“(b)Special Rule Regarding Feasibility Study.—The provisions of section 3(d) of the Liability Risk Retention Act of 1986 (as added by section 5(b) of this Act) [15 U.S.C. 3902(d)], relating to the submission of a feasibility study, shall not apply with respect to any line or classification of liability insurance which—“(1) was defined in the Product Liability Risk Retention Act of 1981 [Pub. L. 97–45, which enacted this chapter] before the date of the enactment of this Act [Oct. 27, 1986]; and“(2) was offered before such date of enactment by any risk retention group which has been chartered and operating for not less than 3 years before such date of enactment.“(c)Rule Regarding Pollution Liability.—“(2) Nothing in this Act shall be construed, interpreted or applied to diminish the obligations of any person to establish or maintain evidence of financial responsibility or otherwise comply with any of the requirements of Federal environmental laws, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 [42 U.S.C. 9601 et seq.] and the Solid Waste Disposal Act [42 U.S.C. 6901 et seq.].”

Short Title of 1986 Amendment

Pub. L. 99–563, § 1, Oct. 27, 1986, 100 Stat. 3170, provided that: “This Act [enacting sections 3905 and 3906 of this title, amending this section, sections 3902 and 3903 of this title, and sections 9671 to 9675 of Title 42, The Public Health and Welfare, enacting provisions set out as notes under this section and section 9671 of Title 42, and amending provisions set out as a note under this section] may be cited as the ‘Risk Retention Amendments of 1986’.”

Short Title

Pub. L. 97–45, § 1, Sept. 25, 1981, 95 Stat. 949, as amended by Pub. L. 99–563, § 12(a), Oct. 27, 1986, 100 Stat. 3177, provided that: “This Act [enacting this chapter] may be cited as the ‘Liability Risk Retention Act of 1986’.”

Oversight of Implementation; Report to Congress

Pub. L. 99–563, § 10, Oct. 27, 1986, 100 Stat. 3176, provided that:“(a)In General.—(1) Not later than September 1, 1987, and not later than September 1, 1989, the Secretary of Commerce shall submit reports to the Congress concerning implementation of this Act [see Short Title of 1986 Amendment note above].“(2) Such report shall be based on—“(A) the Secretary’s consultation with State insurance commissioners, risk retention groups, purchasing groups, and other interested parties; and“(B) the Secretary’s analysis of other information available to the Secretary.“(b)Contents of the Report.—The report shall describe the Secretary’s views concerning—“(1) the contribution of this Act [see Short Title of 1986 Amendment note above] toward resolution of problems relating to the unavailability and unaffordability of liability insurance;“(2) the extent to which the structure of regulation and preemption established by this Act is satisfactory;“(3) the extent to which, in the implementation of this Act, the public is protected from unsound financial practices and other commercial abuses involving risk retention groups and purchasing groups;“(4) the causes of any financial difficulties of risk retention groups and purchasing groups;“(5) the extent to which risk retention groups and purchasing groups have been discriminated against under State laws, practices, and procedures contrary to the provisions and underlying policy of this Act and the Product Liability Risk Retention Act (as amended by this Act) [Pub. L. 97–45, which enacted this chapter]; and“(6) such other comments and conclusions as the Secretary deems relevant to assessment of the implementation of this Act.”

Notes of Decisions

Cited in 77 cases (14 in the last 5 years), 1983–2026 · leading case: Nat'l Home Ins. v. State Corp. Comm'n, 838 F. Supp. 1104 (E.D. Va. 1993).

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Nat'l Home Ins. v. State Corp. Comm'n, 838 F. Supp. 1104 (E.D. Va. 1993). · cites it 8× “Specifically, NHIC argues that the SCC injunction is invalid because the Product Liability Risk Retention Act, 15 U.S.C. § 3901 et seq., (hereinafter “federal Risk Retention Act” or “Act”), permits only a “court of competent jurisdiction” to issue orders enjoining risk retention…”

Attorneys' Liab. Assurance Soc'y, Inc. v. Fitzgerald, 174 F. Supp. 2d 619 (W.D. Mich. 2001). · cites it 8× “Plaintiffs allege that this fee assessment has been preempted by a federal statute, the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 et seq. (LRRA). Plaintiffs seek declaratory and injunctive relief on the basis of preemption in Count I of their First Amended…”

Courville v. Allied Professionals Ins. Co., 174 So. 3d 659 (La. Ct. App. 2015). · cites it 4× “15 U.S.C. § 3901 et seq. APIC, however, refused to participate in the proceedings and filed an exception raising the objection of no cause of action and a Motion to Compel Arbitration and Stay Proceedings.”

Wadsworth v. Allied Professionals Ins., 748 F.3d 100 (2d Cir. 2014). · cites it 3× “LYNCH, Circuit Judge: The federal Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 , et seq. (“the LRRA” or “the Act”), contains sweeping preemption language that sharply limits the authority of states to regulate, directly or indirectly, the operation of risk retention…”

Allied Professionals Ins. v. Michael Anglesey, 952 F.3d 1131 (9th Cir. 2020). · cites it 3× “OPINION CLIFTON, Circuit Judge: The Liability Risk Retention Act of 1986 (“LRRA”), 15 U.S.C. § 3901 et seq., broadly preempts the authority of non- chartering states to regulate the operation of risk retention groups within their borders.”

Reis v. OOIDA Risk Retention Grp., Inc., 814 S.E.2d 338 (Ga. 2018). · cites it 3× “At issue is whether provisions in the federal Liability Risk Retention Act of 1986 ("the LRRA"), 15 USC § 3901 et seq., preempt Georgia's motor carrier and insurance carrier direct action statutes ("direct action statutes"), OCGA §§ 40-1-112 (c), 1 40-2-140 (d) (4), 2 in regard…”

Nat'l Home Ins. v. King, 291 F. Supp. 2d 518 (E.D. Ky. 2003). · cites it 3× “The warranties in the HBW program are insured pursuant to the Federal Risk Retention Act, 15 U.S.C. § 3901 , et seq. As such, the builders’ contractual obligations under the warranty program are backed by a Risk Retention Group.”

Cobert v. Home Owners Warranty Corp., 391 S.E.2d 263 (Va. 1990). · cites it 4× “HOW CORP formed HOW INSURANCE after the 1981 passage by Congress of the Product Liability Risk Retention Act, 15 U.S.C. § 3901 et seq. (the Act). This legislation was enacted in response to the difficulty certain types of businesses were encountering in obtaining product…”

Collins v. AAA Rent All, Inc., 812 F. Supp. 642 (M.D. La. 1993). · cites it 4× “§ 1331 because Charter is a risk retention group formed under and governed by 15 U.S.C. § 3901 , et seq. Charter claims that 15 U.”

Wheelways Ins. Co. v. Hodges, 872 S.W.2d 776 (Tex. App. 1994). · cites it 2× “, domiciled in Pennsylvania and formed pursuant to the federal Liability Risk Retention Act, 15 U.S.C.A. §§ 3901 , et seq. (West 1982 & Supp.”

Home Warranty Corp. v. Elliott, 572 F. Supp. 1059 (D. Del. 1983). · cites it 7× “Home Owners Warranty Corporation, and HOW Insurance Company (“plaintiffs” or “HOW”) brought this action against David Elliott, Insurance Commissioner of the State of Delaware (“the Commissioner”), seeking injunctive relief and a declaratory judgment that HOW Insurance Company is…”

State of Florida, Dep't of Ins. v. Nat'l Amusement Purchasing Grp., Inc., Risk Retention Serv. Corp., Bel-Air Ins. Co., 905 F.2d 361 (11th Cir. 1990). · cites it 3× “15 U.S.C. § 3901 (a)(4), (5). Aimed at reducing the cost and increasing the availability of commercial liability insurance, the Act expressly preempts state laws which make purchasing and risk retention groups illegal.”

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