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U.S. Code as of:
01/19/04
Section 3901. Definitions
(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".(!1)
(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.
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