38.2-5101 - Definitions.
§ 38.2-5101. Definitions.
As used in this chapter:
"Commissioner" means the commissioner, director, or superintendent ofinsurance in a state other than the Commonwealth of Virginia.
"Completed operations liability" means liability arising out of theinstallation, maintenance, or repair of any product at a site which is notowned or controlled by (i) any person who performs that work or (ii) anyperson who hires an independent contractor to perform that work; but shallinclude liability for activities which are completed or abandoned before thedate of the occurrence giving rise to the liability.
"Domicile," for purposes of determining the state in which a purchasinggroup is domiciled, means (i) for a corporation, the state in which thepurchasing group is incorporated; and (ii) for an unincorporated entity, thestate of its principal place of business.
"Hazardous financial condition" means that, based on its present orreasonably anticipated financial condition, a risk retention group, althoughnot yet financially impaired or insolvent, is unlikely to be able (i) to meetobligations to policyholders with respect to known claims and reasonablyanticipated claims or (ii) to pay other obligations in the normal course ofbusiness.
"Insurance" means primary insurance, excess insurance, reinsurance, surpluslines insurance, and any other arrangement for shifting and distributing riskwhich is determined to be insurance under the laws of this Commonwealth.
"Liability" means legal liability for damages, including costs of defense,legal costs and fees, and other claims expenses, because of injuries to otherpersons, damage to their property, or other damage or loss to such otherpersons resulting from or arising out of (i) any business, whether profit ornonprofit, trade, product, services, including professional services,premises, or operations or (ii) any activity of any state or localgovernment, or any agency or political subdivision thereof. Liability doesnot include personal risk liability and an employer's liability with respectto its employees other than legal liability under the federal EmployersLiability Act (45 U.S.C. 51 et seq.).
"Personal risk liability" means liability for damages because of injury toany person, damage to property, or other loss or damage resulting from anypersonal, familial, or household responsibilities or activities.
"Plan of operation" or "feasibility study" means an analysis whichpresents the expected activities and results of a risk retention groupincluding, at a minimum:
1. Information sufficient to verify that its members are engaged inbusinesses or activities similar or related with respect to the liability towhich such members are exposed by virtue of any related, similar or commonbusiness, 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 line ofinsurance the group intends to offer;
3. Historical and expected loss experience of the proposed members andnational experience of similar exposures, to the extent this experience isreasonably 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 requiredto commence operations and to prevent a hazardous financial condition;
6. Identification of management, underwriting and claims procedures,marketing methods, managerial oversight methods, investment policies, andreinsurance agreements;
7. Identification of each state in which the risk retention group hasobtained, or sought to obtain, a charter and license, and a description ofits status in each such state; and
8. Such other matters as may be prescribed by the commissioner or commissionfor liability insurance companies authorized by the insurance laws of thestate in which the risk retention group is chartered.
"Product liability" means liability for damages because of any personalinjury, death, emotional harm, consequential economic damage, or propertydamage, including damages resulting from the loss of use of property, arisingout of the manufacture, design, importation, distribution, packaging,labeling, lease, or sale of a product, but does not include the liability ofany person for those damages if the product involved was in the possession ofsuch a person when the incident giving rise to the claim occurred.
"Purchasing group" means any group which:
1. Has as one of its purposes the purchase of liability insurance on a groupbasis;
2. Purchases such insurance only for its group members and only to covertheir similar or related liability exposure, as described in subdivision 3;
3. Is composed of members whose businesses or activities are similar orrelated with respect to the liability to which members are exposed by virtueof any related, similar, or common business, trade, product, services,premises, or operations; and
4. Is domiciled in any state.
"Risk retention group" means any corporation or other limited liabilityassociation:
1. Whose primary activity consists of assuming and spreading all, or anyportion, of the liability exposure of its group members;
2. Which is organized for the primary purpose of conducting the activitydescribed under subdivision 1;
3. Which (i) is chartered and licensed as a liability insurance company andauthorized to engage in the business of insurance under the laws of any stateor (ii) before January 1, 1985, was chartered or licensed and authorized toengage in the business of insurance under the laws of Bermuda or the CaymanIslands and, before such date, had certified to the insurance commissioner ofat least one state that it satisfied the capitalization requirements of suchstate, except that any such group shall be considered to be a risk retentiongroup only if it has been engaged in business continuously since such dateand only for the purpose of continuing to provide insurance to cover productliability or completed operations liability;
4. Which does not exclude any person from membership in the group solely toprovide for members of such a group a competitive advantage over such aperson;
5. Which (i) has as its members only persons who have an ownership interestin the group and which has as its owners only persons who are members who areprovided insurance by the risk retention group or (ii) has as its sole memberand sole owner an organization which is owned by persons who are providedinsurance by the risk retention group;
6. Whose members are engaged in businesses or activities similar or relatedwith respect to the liability of which such members are exposed by virtue ofany related, similar, or common business, trade, product, services, premises,or operations;
7. Whose activities do not include the provision of insurance other than (i)liability insurance for assuming and spreading all or any portion of theliability of its group members and (ii) reinsurance with respect to theliability of any other risk retention group, or any members of such othergroup, which is engaged in businesses or activities so that such group ormember meets the requirement described in subdivision 6 from membership inthe risk retention group which provides such reinsurance; and
8. The name of which includes the phrase "Risk Retention Group" and doesnot include deceptive or misleading words, designations or phrases.
"State" means any state of the United States or the District of Columbia.
(1987, c. 585; 1992, c. 588.)