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FSLSO » 2010 Legislative Updates » The Non-Admitted and Reinsurance Reform Act » NRRA Glossary

Exempt Commercial Purchaser:

The term "exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:

• The person employs or retains a qualified risk manager to negotiate insurance coverage.
• The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months.
• The person meets at least 1 of the following criteria
  • The person possesses a net worth in excess of $20,000,000, as such amount is adjusted pursuant to clause (ii).
  • The person generates annual revenues in excess of $50,000,000, as such amount is adjusted pursuant to clause (ii).
  • The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate.
  • The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000, as such amount is adjusted pursuant to clause (ii).
  • The person is a municipality with a population in excess of 50,000 persons.
  Effective on the fifth January 1 occurring after the date of the enactment of this subtitle and each fifth January 1 occurring thereafter, the amounts in subclauses (I), (II), and (IV) of clause (i) shall be adjusted to reflect the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor. 15 U.S.C. § 8206(5).

Home State:

In General.—Except as provided in subparagraph (B), the term ‘‘home State’’ means, with respect to an insured—

• the State in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; or
• if 100 percent of the insured risk is located out of the State referred to in clause (i), the State to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.

Affiliated Groups.—If more than 1 insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the term ‘‘home State’’ means the home State, as determined pursuant to subparagraph (A), of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract. 15 U.S.C. § 8206(6).

Independently Procured Insurance:

The term‘‘independently procured insurance’’ means insurance procured directly by an insured from a nonadmitted insurer. 15 U.S.C. § 8206(7).

Nonadmitted Insurance:

The term ‘‘nonadmitted insurance’’ means any property and casualty insurance permitted to be placed directly or through a surplus lines broker with a nonadmitted insurer eligible to accept such insurance. 15 U.S.C. § 8206(9).

Nonadmitted Insurer:

The term "nonadmitted insurer"-

• means, with respect to a State, an insurer not licensed to engage in teh business of insurance in such State; but
• does not include a risk retention group, as that term is defined in section 2(a)(4) of the Liability Risk Retention Act of 1986 (15 U.S.C. 3901(a)(4). 15 U.S.C. §8206(11).)

Premium Tax:

The term ‘‘premium tax’’ means, with respect to surplus lines or independently procured insurance coverage, any tax, fee, assessment, or other charge imposed by a government entity directly or indirectly based on any payment made as consideration for an insurance contract for such insurance, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance. 15 U.S.C. § 8206(12).

Qualified Risk Manager:

The term ‘‘qualified risk manager’’ means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:

• The person is an employee of, or third-party consultant retained by, the commercial policyholder.
• The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance.
• The person-
  • (i):
    • (I) has a bachelor’s degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a State insurance commissioner or other State regulatory official or entity to demonstrate minimum competence in risk management; and
      • (aa) has 3 years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or
      • (bb) has-
        • (AA) a designation as a Chartered Property and Casualty Underwriter (in this subparagraph referred to as ‘‘CPCU’’) issued by the American Institute for CPCU/Insurance Institute of America;
        • (BB) a designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America;
        • (CC) a designation as Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education & Research;
        • (DD) a designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; or
        • (EE) any other designation, certification, or license determined by a State insurance commissioner or other State insurance regulatory official or entity to demonstrate minimum competency in risk management;
  • (ii):
    • (I) has at least 7 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; and
    • (II) has any 1 of the designations specified in subitems (AA) through (EE) of clause (i)(II)(bb);
  • (iii) has at least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or
  • (iv) has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a State insurance commissioner or other State regulatory official or entity to demonstrate minimum competence in risk management. 15 U.S.C. § 8206(13).

Surplus Lines Brokers:

The term ‘‘surplus lines broker’’ means an individual, firm, or corporation which is licensed in a State to sell, solicit, or negotiate insurance on properties, risks, or exposures located or to be performed in a State with nonadmitted insurers. 15 U.S.C. § 8206(15).

State:

The term ‘‘State’’ includes any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa. 15 U.S.C. § 8206(16).