Faced with a hard insurance marketplace and eager to offer an alternative source of insurance to its current and prospective members, the National Burglar & Fire Alarm Association (“NBFAA”) recently turned to the law firm Buchanan Ingersoll PC for a solution.
Combining the disciplines of the firm’s Security Alarm and Insurance Regulatory Practice Groups, Buchanan Ingersoll recommended that the NBFAA explore forming its own insurer to provide NBFAA members with a new source for their liability insurance and a mechanism to participate actively in the management of their own risks.
On Sept. 4, the Vermont Department of Banking, Insurance, Securities, and Health Care Administration licensed Security America Risk Retention Group, Inc. (“Security America RRG”) as a captive insurer under Vermont law. Because Security America qualifies as a risk retention group under federal law (the Liability Risk Retention Act), it will be able to insure the liability of NBFAA members throughout the country without having to obtain a license to do business in each state. The ability of a risk retention group to operate across state lines while being subject to regulation by only its state of domicile distinguishes risk retention groups from traditional insurers. NBFAA owns a majority of the stock in the new insurer.
“Every industry has felt the crunch of this hard insurance market; the alarm industry is no exception,” said Bryan Lawrence, counsel to the NBFAA and co-chair of the firm’s Security Alarm Group. “The NBFAA wanted to help ease this burden on the industry.”
According to Marc Tepper, a shareholder in Buchanan Ingersoll’s Philadelphia office and chair of the firm’s Insurance Regulatory Practice Group, forming the risk retention group was a step in the right direction for the NBFAA. “Regardless of your industry, risk is a guaranteed by-product of operating a business enterprise. But while traditional insurers may insure simultaneously different types of risks generated across multiple industries, the risk retention group model provides an industry-specific solution. That’s one of the reasons why it has become the insurance mechanism of choice for many trade associations throughout the country.”
Security America will offer general and professional liability insurance to members of the NBFAA.
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