Risk Retention Amendments of 1986

(Senate agreed to House amendment with an amendment)

Risk Retention Amendments of 1986 - Amends the Product Liability Risk Retention Act of 1981 to define "liability" as legal liability for damages because of injuries to other persons, damage to their property, or other damage or loss resulting from: (1) any business, trade, product, services, premises, or operation; or (2) any activity of a State or local government. Excludes from such definition personal risk liability and employer's liability.

Excludes from such Act's coverage product liability risk retention groups formed on or after January 1, 1985, under the laws of Bermuda or the Cayman Islands. Deems such groups formed before January 1, 1985, to be risk retention groups only for the purpose of continuing to provide product liability or completed operations liability.

Adds to the definition of "risk retention group" certain requirements pertaining to the structure of such group.

Requires that members of a purchasing group have businesses or activities which are similar or related with respect to the liability to which the members are exposed by virtue of any related, similar, or common business, trade product, service, premises, or operations.

Requires that risk retention groups make certain reports to State insurance regulators. Allows the State to require the group to comply with an order issued in a delinquency proceeding if there is a finding of financial impairment.

Authorizes any State to require a group to comply with any State law regarding false or fraudulent acts or practices.

Permits any State to require a group to: (1) comply with a lawful order issued in a voluntary dissolution proceeding; (2) make reinsurance available only to organizations whose businesses are similar or related with respect to the nature of their exposure to the risk of liability; (3) comply with any court injunction issued in accordance with administrative due process upon a State insurance commission's petition alleging that the group is in a hazardous financial condition or is financially impaired; (4) submit to the State insurance commission a plan of operation or feasibility study including specified information; and (5) provide a specified cautionary notice in any insurance policy it issues.

Declares that nothing in such Act shall be construed to affect the authority of any court to enjoin: (1) the solicitation or sale of insurance by a risk retention group to persons ineligible to belong to such group; (2) false, deceptive, or fraudulent acts or practices in the solicitation or sale of such insurance; (3) the solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition; or (4) the solicitation or sale of insurance by, or operation of, a risk retention group that has been found, or any of whose officers, organizers, or directors have been found, to have engaged in knowing and willful false, deceptive, or fraudulent conduct within the previous five years, and under circumstances that present a reasonable likelihood that such conduct will recur. Subjects risk retention groups to State no-fault automobile insurance requirements. Limits the authority to provide or purchase insurance under such Act to liability insurance.

States that the terms of any insurance policy provided or purchased under such Act shall not be construed to include coverage for punitive damages, or intentional fraudulent or criminal conduct, if any such coverage is prohibited by State law or declared unlawful by State supreme court decisions.

Sets forth general enforcement powers of any State insurance commissioner with respect to prohibited conduct by risk retention groups or purchasing groups.