                                 CODE OF VIRGINIA

DEFINITIONS (§ 38.2-5101)

As used in this chapter:
		&#8220;Commissioner&#8221; means the commissioner, director, or superintendent
of insurance in a state other than the Commonwealth of Virginia.
		&#8220;Completed operations liability&#8221; means liability arising out of
the installation, maintenance, or repair of any product at a site which is not
owned or controlled by (i) any person who performs that work or (ii) 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.
		&#8220;Domicile,&#8221; for purposes of determining the state in which a
purchasing group is domiciled, means (i) for a corporation, the state in which
the purchasing group is incorporated; and (ii) for an unincorporated entity, the
state of its principal place of business.
		&#8220;Hazardous financial condition&#8221; means that, 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 (i) to meet
obligations to policyholders with respect to known claims and reasonably
anticipated claims or (ii) to pay other obligations in the normal course of
business.
		&#8220;Insurance&#8221; means 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.
		&#8220;Liability&#8221; 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. Liability does not include personal
risk liability and an employer&#8217;s liability with respect to its employees
other than legal liability under the federal Employers Liability Act (45 U.S.C.
§ 51 et seq.).
		&#8220;Personal risk liability&#8221; 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.
		&#8220;Plan of operation&#8221; or &#8220;feasibility study&#8221; means an
analysis which presents the expected activities and results of a risk retention
group including, at a minimum:

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 line 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 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. 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 such state; and

8. Such other matters as may be prescribed by the commissioner or commission for
liability insurance companies authorized by the insurance laws of the state in
which the risk retention group is chartered.
			&#8220;Product liability&#8221; 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.
			&#8220;Purchasing group&#8221; means 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 subdivision 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.
			&#8220;Risk retention group&#8221; means 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 subdivision 1;

3. Which (i) 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
(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 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 (i) has as its members only persons who have an ownership interest in
the group and which has as its owners only persons who are members who are
provided insurance by the risk retention group or (ii) has as its sole member
and sole owner an organization which is owned by persons 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 group,
which is engaged in businesses or activities so that such group or member meets
the requirement described in subdivision 6 from membership in the risk retention
group which provides such reinsurance; and

8. The name of which includes the phrase &#8220;Risk Retention Group&#8221; and
does not include deceptive or misleading words, designations or phrases.
			&#8220;State&#8221; means any state of the United States or the District of
Columbia.

HISTORY: 1987, c. 585; 1992, c. 588.