KRS 304.45-040: Requirements for doing business -- Exemptions.

Risk retention groups chartered and licensed in states other than this state and seeking to

do business as a risk retention group in this state shall observe and abide by the laws of

this state as follows:

(1) Before offering insurance in this state, a ris k retention group shall submit to the

commissioner:

(a) A statement identifying the state or states in which the risk retention group is

chartered and licensed as a liability insurance company, date of chartering and

licensing, its principal place of busin ess, and any other information, including

information on its membership, as the commissioner of this state may require

to verify that the risk retention group is qualified under KRS 304.45-020(15);

(b) A copy of its plan of operation or a feasibility study and revisions of the plan

or study submitted to its state of domicile, but the provision relating to the

submission of a plan of operation or a feasibility study shall not apply as to

any kind or classification of liability insurance which was defined in the

Product Liability Risk Retention Act of 1981 before October 27, 1986, and

was offered before that date by any risk retention group which had been

chartered and operating for not less than three (3) years at that time; and

(c) A statement of registration which designates the Secretary of State as its agent

for the purpose of receiving service of legal documents or process.

(2) Any risk retention group doing business in this state shall submit to the

commissioner:

(a) A copy of the group's financial state ment submitted to the state in which the

risk retention group is chartered and licensed, which shall be certified by an

independent public accountant and contain a statement of opinion on loss and

loss adjustment expense reserves made by a member of the Am erican

Academy of Actuaries or a qualified loss reserve specialist under criteria

established by the National Association of Insurance Commissioners;

(b) A copy of each financial, market conduct, or other examination of the risk

retention group as certified by the commissioner or public official conducting

the examination;

(c) Upon request by the commissioner, a copy of any audit performed with

respect to the risk retention group; and

(d) Any information as may be required to verify its continuing qualifica tion as a

risk retention group under KRS 304.45-020(15).

(3) A risk retention group shall, within ten (10) days, notify the commissioner of any

changes in any of the information required in subsections (1) and (2) of this section.

(4) Any risk retention gr oup shall submit to an examination by the commissioner to

determine its financial condition if the commissioner of the jurisdiction in which the

group is chartered and licensed has not initiated an examination or does not initiate

an examination within six ty (60) days after a request by the commissioner of this

state. Any examination shall be coordinated to avoid unjustified repetition and

conducted in an expeditious manner and in accordance with the National

Association of Insurance Commissioners' examiner handbook. The examinations

shall be conducted in accordance with KRS 304.2-210 to 304.2-300.

(5) Any application used or any policy issued by a risk retention group shall contain in

ten (10) point boldface type the following legend:

NOTICE

THIS POLICY IS ISSUED BY YOUR RISK RETENTION GROUP. YOUR

RISK RETENTION GROUP MAY NOT BE SUBJECT TO ALL OF THE

INSURANCE LAWS AND REGULATIONS OF YOUR STATE. STATE

INSURANCE INSOLVENCY GUARANTY FUNDS ARE NOT

AVAILABLE FOR YOUR RISK RETENTION GROUP.

(6) In the solicitation or sale of insurance, a risk retention group shall not:

(a) Solicit or sell insurance to any person who is not eligible for membership in

the group; and

(b) Solicit or sell insurance issued by, or otherwise operate, a risk retention group

that is in a hazardous financial condition or is financially impaired.

(7) No risk retention group shall be allowed to do business in this state if an insurance

company is directly or indirectly a member or owner of the risk retention group,

except if all members of the risk retention group are insurance companies.

(8) A risk retention group shall not offer insurance policy coverage prohibited by

statute or regulation or declared unlawful by the highest court of this state.

(9) A risk retention group not cha rtered in this state and doing business in this state

shall comply with a lawful order issued in a voluntary dissolution proceeding or in a

delinquency proceeding commenced by a commissioner if there has been a finding

of financial impairment after an examination under subsection (4) of this section.

(10) A risk retention group registered in this state as a product liability risk retention

group under the provisions of KRS Chapter 304 in effect prior to July 13, 1990,

may continue to act as one without comp lying with this subtitle as long as it

complies with the provisions of KRS Chapter 304 in effect prior to July 13, 1990.

The exception provided in this subsection shall cease to apply to any product

liability risk retention group which offers kinds of liab ility insurance other than

product liability or completed operations liability insurance.