SOURCE: National Risk Retention Association

National Risk Retention Association

March 28, 2011 10:03 ET

New Jersey Assembly Bill Violates Federal Law, NRRA Asserts

WASHINGTON, DC--(Marketwire - March 28, 2011) - The National Risk Retention Association (NRRA) today advised Governor Chris Christie of New Jersey that a bill pending in the State legislature would discriminate against Risk Retention Groups (RRG) in direct violation of federal law.

In a letter to the Governor, Robert H. Myers, Jr., NRRA General Counsel, stated that an amendment to Assembly Bill 1471 requiring taxicab drivers to obtain insurance from an insurer that is a member of the New Jersey Property-Liability Guaranty Association would discriminate against RRGs "in a manner prohibited by federal law." The New Jersey legislation would exclude RRGs from providing liability insurance to taxicab drivers because the federal Liability Risk Retention Act of 1986 (LRRA) expressly prohibits RRGs from becoming members of state guaranty associations, Myers stated. LRRA authorized RRGs licensed in a single state to operate nationally without additional licensing and free of most regulation by other states.

Myers pointed out that federal courts have ruled in favor of the preemption provision of the LRRA. He cited a case in which the Ninth U.S. Circuit Court of Appeals "held that the LRRA preempted provisions of the Oregon Service Contract Act which unlawfully discriminated against RRGs by requiring automobile dealers to obtain liability insurance from the Oregon Insurance Guaranty Association." The Court ruled that the Oregon law "may not categorically exclude coverage from all RRGs." He noted that the New Jersey Assembly Bill is nearly identical to the Oregon case "because the proposed legislation unconditionally excludes coverage from all RRGs."

Brian Braley, President of NRRA, said the New Jersey bill "is another example of states interfering with the legal operation of RRGs." Braley asserted that, "It's time for Congress to provide a mechanism to enforce the LRRA." Legislation that would provide for arbitration of disputes with states concerning RRG operations was introduced in the last Congress and is expected to be brought up again soon.

Contact Information

  • For more information, contact
    Mechlin Moore
    NRRA Communications Director
    239-777-1595
    Email Contact