Judge Rules Group Can Resume Insuring Nevada Charities

A federal judge in Las Vegas has ruled that the state of Nevada had no right to stop a risk retention group from providing commercial auto insurance policies to charities in that state, clearing the way for the Alliance of Nonprofits for Insurance Risk (ANI) to continue covering its members.

U.S. District Judge James Mahan last week ruled against state regulators in a lawsuit filed last year by ANI, declaring that the Nevada Division of Insurance (NDI) had no authority to order the nonprofit alliance from operating in the state.

The ruling “should send a message to other states that attempt to restrict the operation of” risk retention groups, Brian Baley, president of the National Risk Retention Association (NRRA), said in a statement.

Judge's gavelRisk retention groups are liability insurers that are owned by members—such as healthcare professionals or charitable organizations—who share similar business activities.

State regulators ordered ANI in September 2010 to stop issuing “first-dollar” auto policies—which pay up to the full coverage amount without requiring payment of a deductible—because the group was not authorized to do so under state law. The order did not bar ANI from covering members for more than the state minimums.

ANI—which is headquartered in Vermont but has been providing commercial Nevada auto insurance policies for a decade—challenged the order, which it claimed would have forced its members to seek more expensive coverage from for-profit providers.

Mahan ruled that the Liability Risk Retention Act of 1986—a federal law that authorized risk retention groups that are chartered in one state to operate nationwide—preempted state law under which risk retention groups are not allowed to sell first-dollar coverage.

Mahan ordered the state to recognize groups such as ANI as authorized insurers.

NRRA had written an amicus brief on behalf of ANI, seeking a court injunction against enforcement of an NDI order that would have required the group to enter into a fronting arrangement with an authorized Nevada insurer in order to operate there.

ANI objected to the order because it would have forced the group to pay for the ability to sell coverage.


About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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