Section 991.1502 - DefinitionsAs used in this article the following words and phrases shall have the meanings given to them in this section:
"Admitted insurer." An insurer with a valid certificate of authority to do insurance business in this Commonwealth.
"Commissioner." The Insurance Commissioner of the Commonwealth.
"Completed operations liability." 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.
"Department." The Insurance Department of the Commonwealth.
"Doing business." Those acts which constitute the doing of insurance business in this Commonwealth as set forth in section 208(b) of the act of May 17, 1921 (P.L. 789, No. 285), known as "The Insurance Department Act of one thousand nine hundred and twenty-one," except that risk retention groups and purchasing groups are not doing business when responding to a request for coverage received directly from a Pennsylvania resident and not as a result of solicitation.
"Domicile." For purposes of determining the state in which a purchasing group is domiciled, the term means the following:
(1) For a corporation, the state in which the purchasing group is incorporated.(2) For an unincorporated entity, the state of its principal place of business. "Eligible surplus lines insurer." A nonadmitted insurer doing business in this Commonwealth in conformance with Article XVI.
"Hazardous financial condition." A condition in which, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, 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. "Insurance." Primary insurance, excess insurance, reinsurance, surplus lines insurance and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this Commonwealth.
"Liability."
(1) The term 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.(2) The term does not include personal risk liability and an employer's liability with respect to its employes other than legal liability under the Employers' Liability Act (34 Stat. 232, 45 U.S.C. § 51 et seq.). "Nonadmitted insurer." An insurer that does not have a certificate of authority to do insurance business in this Commonwealth. The term includes insurance exchanges authorized under laws of various states.
"Personal risk liability." A 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 the definition of "liability."
"Plan of operation or a feasibility study." An analysis which presents the expected activities and results of a risk retention group, including, at a minimum, all of 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 liability 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 a hazardous financial condition.(6) Identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies and reinsurance agreements.(7) The states in which the risk retention group intends to operate or is currently operating.(8) Such other matters as may be prescribed by the department for liability insurance companies authorized by the insurance laws of the state in which the risk retention group is chartered. "Product liability." 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. The term does not include the liability of any person for these damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.
"Purchasing group." Any group 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 (3);(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. "Risk retention group." Any corporation or other limited liability association:
(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 (1);(3) which: (i) is chartered and licensed as an insurance company to write liability insurance and authorized to engage in the business of insurance under the laws of any 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 department 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 the Product Liability Risk Retention Act of 1981 ( Public Law 97-45, 95 Stat. 949), before the date of the enactment of the Risk Retention Amendments of 1986 ( Public Law 99-563, 100 Stat. 3170);(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: (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 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:(i) liability insurance for assuming and spreading all or any portion of the liability of its group members; and(ii) reinsurance with respect to the liability of any other risk retention group (or any members of such other risk retention group) which is engaged in businesses or activities so that the group or member meets the requirement described in paragraph (6) for membership in the risk retention group which provides such reinsurance; and(8) the name of which includes the phrase "Risk Retention Group." "State." Any state of the United States or the District of Columbia.
1921, May 17, P.L. 682, No. 284, art. XV, § 1502, added 1992, Dec. 18, P.L. 1519, No. 178, § 19, effective in 120 days.