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SECTION 5902
Definitions
Insurance (ISC) CHAPTER 28, ARTICLE 59
§ 5902. Definitions. The terms used in this article shall have the
meanings set forth in this chapter, except to the extent added or
modified by the following:

(a) "Commissioner" means the commissioner, director or superintendent
of financial services in any other state.

(b) "Completed operations liability" means liability arising out of
the installation, maintenance, or repair of any product at a site which
is not owned or controlled by:

(1) any person who performs that work; or

(2) any person who hires an independent contractor to perform that
work;
but shall include liability for activities which are completed or
abandoned before the date of the occurrence giving rise to the
liability.

(c) "Domicile", for purposes of determining the state in which a
purchasing group is domiciled, means:

(1) for a corporation, the state in which the purchasing group is
incorporated; and

(2) for an unincorporated entity, the state of its principal place of
business.

(d) "Financially impaired" means a risk retention group:

(1) whose admitted assets are less than the sum of its aggregate
liabilities and the amount of surplus to policyholders required to be
maintained by a domestic risk retention group authorized to do the same
kind or kinds of insurance; or

(2) whose admitted assets are less than the sum of its aggregate
liabilities and outstanding capital stock; or

(3) which is insolvent.

(e) "Hazardous financial condition" means that, based on its present
or reasonably anticipated financial condition, a risk retention group,
although not yet financially impaired, is unlikely to be able:

(1) to meet obligations to policyholders with respect to known claims
and reasonably anticipated claims; or

(2) to pay other obligations in the normal course of business.

(f) "Insolvent" means a risk retention group whose admitted assets are
less than the aggregate amount of its liabilities.

(g) "Insurance" means primary insurance, excess insurance,
reinsurance, excess line insurance, and any other arrangement for
shifting and distributing risk which is determined to be insurance under
the laws of this state.

(h) "Liability" 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:

(1) (A) any business (whether profit or nonprofit), trade, product,
services (including professional services), premises, or operations; or

(B) any activity of any state or local government, or any agency or
political subdivision thereof; and

(2) 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.).

(i) "Located" or "location", for purposes of determining the state in
which a purchasing group is located, shall be defined in regulations
promulgated by the superintendent which shall not be inconsistent with
the Federal Liability Risk Retention Act of 1986 and amendments thereto.

(j) "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 subsection (h) of this section.

(k) "Plan of operation or feasibility study" means an analysis which
presents the expected activities and results of a risk retention group
making application to become chartered and licensed as a domestic
property/casualty insurer in this state, including at least the
following:

(1) information sufficient to verify that its 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;

(2) for each state in which it intends to operate, the coverages,
deductibles, coverage limits, rates, and rating classification systems
for each kind of insurance the group intends to offer;

(3) historical and expected loss experience of the proposed members
and national experience of similar exposures to the extent that this
experience is reasonably available;

(4) pro forma financial statements and projections;

(5) appropriate opinions by a qualified, independent casualty actuary,
including a determination of minimum premium or participation levels
required to commence operations and to prevent the development of a
hazardous financial condition;

(6) identification of management, underwriting and claims procedures,
marketing methods, managerial oversight methods, investment policies and
reinsurance agreements;

(7) identification of each state in which the risk retention group has
obtained, or sought to obtain, a charter and license, and a description
of its status in each state; and

(8) such other matters as may be prescribed by the commissioner of the
state in which the risk retention group is chartered for liability
insurance companies authorized by the insurance laws of the state.

(l) "Product liability" means liability for damages because of any
personal injury, death, emotional harm, consequential economic damage,
or property damage (including damages resulting from the loss of use of
property) arising out of the manufacture, design, importation,
distribution, packaging, labeling, lease, or sale of a product, but does
not include the liability of any person for those damages if the product
involved was in the possession of such a person when the incident giving
rise to the claim occurred.

(m) "Purchasing group" means any group formed pursuant to the federal
liability risk retention act of 1986 which:

(1) has as one of its purposes the purchase of liability insurance on
a group basis;

(2) purchases such insurance only for its group members and only to
cover their similar or related liability exposure, as described in
paragraph three of this subsection;

(3) 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

(4) is domiciled in any state.

(n) "Risk retention group" means any corporation or other limited
liability association formed pursuant to the federal liability risk
retention act of 1986:

(1) whose primary activity consists of assuming and spreading all, or
any portion, of the liability exposure of its group members;

(2) which is organized for the primary purpose of conducting the
activity described under paragraph one of this subsection;

(3) which:

(A) is chartered and licensed as a liability insurance company and
authorized to engage in the business of insurance under the laws of any
state; or

(B) before January first, nineteen hundred eighty-five, 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;

(4) 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;

(5) which:

(A) has as its owners only persons who comprise the membership of the
risk retention group and who are provided insurance by such group; or

(B) has as its sole owner an organization which has as its members
only persons who comprise the membership of the risk retention group and
which organization has as its owners only persons who comprise the
membership of the risk retention group and who are provided insurance by
the risk retention group;

(6) whose members are engaged in businesses or activities similar or
related with respect to the liability of which such members are exposed
by virtue of any related, similar, or common business trade, product,
services, premises or operations;

(7) whose activities do not include the provision of insurance other
than:

(A) liability insurance for assuming and spreading all or any portion
of the liability of its group members; and

(B) reinsurance with respect to the liability of any other risk
retention group (or any member of such other risk retention group) which
is engaged in businesses or activities which meet the requirement
described in paragraph six of this subsection for membership in the risk
retention group which provides such reinsurance; and

(8) the name of which includes the phrase "risk retention group".

(o) "State" means any state of the United States or the District of
Columbia.

(p) "Superintendent" means the superintendent of financial services of
this state.