§ 25-101

(a) In this subtitle the following words have the meanings indicated.

(b) “Board of directors” or “board” means the governing body of a risk retention group elected by the shareholders or members of the risk retention group to establish policy, elect or appoint officers and committees, and make other governing decisions.

(c) (1) “Completed operations liability” means liability arising out of the installation, maintenance, or repair of a product at a site that is not owned or controlled by:

(i) a person that performs that work; or

(ii) a person that hires an independent contractor to perform that work.

(2) “Completed operations liability” includes liability for activities that are completed or abandoned before the date of the occurrence giving rise to the liability.

(d) “Director” means an individual designated in the articles of incorporation of a risk retention group, or designated, elected, or appointed by any other manner, name, or title to act as a director of the risk retention group.

(e) “Domicile” means, for the purpose of determining the state in which a purchasing group has its domicile:

(1) the state of incorporation of a purchasing group that is a corporation; or

(2) the state of the principal place of business of a purchasing group that is an unincorporated entity.

(f) “Hazardous financial condition” means the condition of a risk retention group in which, based on its present or reasonably anticipated financial condition, the risk retention group:

(1) is not yet financially impaired or insolvent; but

(2) is unlikely to be able to:

(i) meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or

(ii) pay other obligations in the normal course of business.

(g) “Immediate family member” means an individual’s:

(1) spouse;

(2) child;

(3) child’s spouse;

(4) parent;

(5) spouse’s parent;

(6) sibling; or

(7) sibling’s spouse.

(h) “Insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk that is determined to be insurance under the laws of the State.

(i) (1) “Liability” means legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses, because of injuries to persons, damage to their property, or other damage or loss to those persons, resulting from or arising out of:

(i) a business, whether profit or nonprofit, trade, products, services, including professional services, premises, or operations; or

(ii) an activity of a state or local government, or an agency or political subdivision of a state or local government.

(2) “Liability” does not include:

(i) personal risk liability, which is liability for damages because of injury to a person, damage to property, or other damage or loss resulting from personal, familial, or household responsibilities or activities; or

(ii) the liability of an employer with respect to its employees other than legal liability under the federal Employers’ Liability Act.

(j) “Plan of operation or feasibility study” means an analysis that presents the expected activities and results of a risk retention group including, at a minimum:

(1) information sufficient to verify that the members of the risk retention group are engaged in businesses or activities that are similar or related with respect to the liability to which the members are exposed by virtue of related, similar, or common business, trade, products, services, premises, or operations;

(2) for each state in which the risk retention group intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance that the risk retention 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 begin 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 state identified; and

(8) any other matters required by the commissioner of the state in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that state.

(k) (1) “Product liability” means liability for damages because of personal injury, death, emotional harm, consequential economic damage, or property damage, including damages resulting from the loss of use of the property, arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product.

(2) “Product liability” does not include the liability of a person for damages if the product involved was in the possession of the person when the incident giving rise to the claim occurred.

(l) “Purchasing group” means a group that:

(1) has as a purpose the purchase of liability insurance on a group basis;

(2) purchases liability insurance only for its group members and only to cover the similar or related liability exposure of the group members;

(3) is composed of members engaged in businesses or activities that are similar or related with respect to the liability to which the members are exposed by virtue of related, similar, or common business, trade, products, services, premises, or operations; and

(4) has its domicile in a state.

(m) “Risk retention group” means a corporation or other limited liability association:

(1) that is formed under the laws of a state, Bermuda, or the Cayman Islands;

(2) the primary activity of which consists of assuming and spreading all or part of the liability exposure of its group members;

(3) that is organized for the primary purpose of conducting the activity described in item (2) of this subsection;

(4) that:

(i) is chartered and licensed as a liability insurance company and authorized to engage in the insurance business under the laws of a state; or

(ii) 1. on or before December 31, 1984, was chartered or licensed and authorized to engage in the insurance business under the laws of Bermuda or the Cayman Islands and, on or before December 31, 1984, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of that state; and

2. has been engaged in business continuously since January 1, 1985 and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability;

(5) that does not exclude a person from membership in the group solely to provide for members of the group a competitive advantage over that person;

(6) that:

(i) has as its members only persons that have an ownership interest in the group and has as its owners only persons that are members of the group and are provided insurance by the group; or

(ii) has as its sole owner an organization that:

1. has as its members only persons that are members of the group; and

2. has as its owners only persons that are members of the group and are provided insurance by the group;

(7) the members of which are engaged in businesses or activities that are similar or related with respect to the liability to which the members are exposed by virtue of related, similar, or common business, trade, products, services, premises, or operations;

(8) the activities of which do not include the provision of insurance other than:

(i) liability insurance for assuming and spreading all or part of the liability of its group members; and

(ii) reinsurance with respect to the liability of another risk retention group, or a member of the other risk retention group, that is engaged in businesses or activities so that the risk retention group or member meets the requirement of item (7) of this subsection of membership in the risk retention group that provides the reinsurance; and

(9) the name of which includes the phrase “risk retention group”.

(n) (1) Except as provided in paragraph (2) of this subsection, “state” means a state of the United States or the District of Columbia.

(2) When capitalized, “State” means Maryland.