# Title 45 — Insurance, Commissioner of

## Article 45-05 — Property and Casualty Insurance

## Chapter 45-05-05 — Risk Retention and Purchasing Groups

Memorandum
### § 45-05-05-01. Definitions.

As used in this chapter:
1. "Authorized to transact insurance in this state" and "admitted" means an insurer authorized by
a subsisting certificate of authority issued by the commissioner to transact insurance in this
state.
2. "Commissioner" means the insurance commissioner of North Dakota.
3. "Federal Liability Risk Retention Act of 1986" means that federal legislation which authorized
qualified individuals or organizations to form special association insurance captives or to join
together to purchase liability insurance on a group basis enacted as 15 U.S.C. 3901, et seq.
4. "Liability insurance coverage" means liability insurance policy or endorsement forms under
which a liability risk retention group or liability insurer may undertake to indemnify a risk
retention group or purchasing group member against liability arising from similar hazards or
risk contingencies including, but not limited to, those liability insurance coverages commonly
referred to in the industry as products-completed operations' liability, liquor liability, hospital
professional liability, physicians', surgeons', and dentists' liability, lawyers' professional liability,
elevator liability, storekeepers' liability, governmental entity general liability, public officials'
errors and omissions, school board errors and omissions, directors' and officers' errors and
omissions, oilfield general liability, day care general liability, outfitters' and guides' general
liability, recreational area general liability, long haul truckers' liability, garage liability, pollution
liability, etc.
5. "Purchasing group" means any group meeting the requirements of a purchasing group
contained in North Dakota Century Code chapter 26.1-46.
6. "Purchasing group representative" means any individual, partnership, or corporation appointed
by a purchasing group for the purpose of providing insurance to the members of the
purchasing group or for the purpose of soliciting members for the purchasing group.
7. "Risk retention group" means any group meeting the requirements of a risk retention group
contained in North Dakota Century Code chapter 26.1-46.

8. "Risk retention group representative" means any individual, partnership, or corporation
appointed by a risk retention group for the purpose of providing insurance to the members of
the risk retention group.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-02. Financial statements, reports, examinations.

Any risk retention group doing business in this state shall submit to the commissioner all of the
following:
1. By March first of each year, a copy of the group's financial statement submitted to its state of
domicile, which must 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
American academy of actuaries or a qualified loss reserve specialist according to criteria
established by the national association of insurance commissioners.
2. A copy of each examination of the risk retention group as certified by the commissioner or
public official conducting the examination.
3. A copy of any audit performed with respect to the risk retention group.
4. This section does not apply to risk retention groups doing business in this state which have
fewer than twenty-six resident members or insureds.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-03. Risk retention groups not chartered in this state - Registration.

1. Any risk retention group chartered in a state other than North Dakota and not holding a
subsisting certificate of authority issued by the commissioner of the state of North Dakota,
before offering liability insurance as a risk retention group on any risk located, resident or to be
performed in this state, shall:
a. Register with the commissioner in the form and manner prescribed by the commissioner,
a statement sworn to by the president or chief executive officer and the secretary of the
risk retention group providing such information and documentation as the commissioner
shall require pursuant to North Dakota Century Code section 26.1-46-03.
b. File with the commissioner a copy of the risk retention group's charter showing that it has
been organized primarily for the purpose of assuming and spreading all, or any portion,
of the liability exposure of the group members.
c. File with the commissioner a copy of the risk retention group's certificate of authority or
license issued in its state of domicile authorizing it to transact business as an insurance
company.
d. File with the commissioner a copy of the risk retention group's most recent annual
financial statement which must be certified by an independent public accountant.
2. Any risk retention group chartered in a state other than North Dakota and not holding a
subsisting certificate of authority issued by the commissioner of the state of North Dakota
which has registered with the commissioner pursuant to section 3(d) of the Federal Liability

Risk Retention Act of 1986 or North Dakota Century Code section 26.1-46-03 prior to
October 1, 1989, shall comply with subsection 1 by registering in the form prescribed by
subsection 1 on or before December 1, 1989.
3. The statement of registration appointing the commissioner as agent for the purpose of
receiving legal documents and service of process, required in North Dakota Century Code
sections 26.1-46-03 and 26.1-46-07 shall be irrevocable, and must be in substantially the
same form as that shown in exhibit A.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-04. Liability purchasing group notice of intent.

1. Any purchasing group which intends to do business in this state, before soliciting any member
to insure through the group any liability risk located, resident or to be performed in this state,
shall furnish notice of its intent to do business to the commissioner, in the form and manner
prescribed by the commissioner, sworn to by the president, chief executive officer, secretary,
partner, trustee, or such other officer or party who, under the organizational plan of the group,
has authority to bind the group with that person's signature, on forms the commissioner
designates and furnishes, providing such information and documentation as the commissioner
shall require pursuant to North Dakota Century Code section 26.1-46-07.
2. Any purchasing group which has filed with the commissioner its notice of intent to do business
pursuant to section 4(d)(1) of the Federal Liability Risk Retention Act of 1986 or North Dakota
Century Code section 26.1-46-07 prior to October 1, 1989, shall comply with subsection 1 by
registering in the form prescribed by subsection 1 on or before December 1, 1989.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-05. Updates and amendments.

1. Any risk retention group or purchasing group authorized to do business in the state of North
Dakota shall notify the commissioner in writing within thirty days of any changes in its
operations, which result in the registration or notice then on file containing false, inaccurate, or
misleading information, including the solicitation or writing of any liability insurance coverage
in addition to that for which it is registered, so as to correct such false, inaccurate, or
misleading information. The commissioner may request such additional information and
documentation pertaining to such notice as the commissioner deems necessary provided,
however, no such request shall delay the effective date of the notice.
2. Any risk retention group or purchasing group authorized to do business in the state of North
Dakota, on or before March first of each year, by sworn affidavit, shall certify to the
commissioner as to the continued accuracy of the information on file or as amended by notice
filed pursuant to subsection 1, and as to its continued intent to be registered and do business
in this state.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46

### § 45-05-05-06. Risk retention group representatives and purchasing group representatives.

1. License requirement. No person, resident or nonresident in this state, may act as or hold out
in this state to be a risk retention group representative for a risk retention group, or a
purchasing group representative for a purchasing group which solicits members for the
purpose of selling liability insurance coverage, purchases liability insurance coverage for
group members located within this state or otherwise does business in this state unless then
licensed as such under these rules.
2. Any person, resident or nonresident in this state, acting as or holding out in this state to be a
risk retention group representative or a purchasing group representative must hold a current
North Dakota insurance producer license, in the lines of insurance represented, and must be
appointed by the risk retention group or purchasing group represented in North Dakota.
3. Any person acting as a risk retention group representative or purchasing group representative
shall otherwise be subject to and comply with the provisions of North Dakota Century Code
chapter 26.1-46 as they pertain to insurance producers.
4. Exceptions to license requirement. Risk retention group representative and purchasing group
representative for the purpose of licensing does not include:
a. Any officer, director, owner, partner, trustee, or full-time salaried employee of a risk
retention group or purchasing group; and
b. Any telemarketing or mass mailing organization or any radio or television station or
network or, newspaper or magazine publisher or distributor which makes statements or
carries advertisements for a risk retention group or purchasing group to the extent only
general, nonrisk specific information is given concerning the Federal Liability Risk
Retention Act, North Dakota Century Code chapter 26.1-46, and the risk retention group
or purchasing group and no application for insurance is received, no underwriting
information is taken, and no insurance rate or premium is quoted or collected.
5. Licensing of partnership or corporation.
a. A partnership or corporation may be licensed as a risk retention group representative or
purchasing group representative. Each general partner and each other individual
authorized to act for the partnership and each individual authorized to act for the
corporation must be named in the license or registered with the commissioner and shall
qualify as through an individual licensee; and
b. The licensee shall promptly notify the commissioner of any changes among its members,
directors, officers, and other individuals designated in or registered as to the license.
History: Effective October 1, 1989; amended effective April 1, 2010.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-07. Group location.

For the purposes of this chapter, a purchasing group must be deemed located in this state if any
member of said group is located or resident in this state.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46

### § 45-05-05-08. Insurance purchase.

Any purchasing group duly authorized to do business in the state of North Dakota may purchase
insurance only from the following sources:
1. A risk retention group authorized to do business in this state.
2. An admitted insurance carrier.
3. An authorized surplus lines carrier listed on the commissioner's white list, only if the purchase
is effected through a licensed surplus lines producer who has been appointed by the
purchasing group.
History: Effective October 1, 1989; amended effective April 1, 2010.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-09. Risk retention group representative or purchasing group representative

memorandum.
Any risk retention group representative or purchasing group representative effecting insurance on
any risk located, resident or to be performed within or properly allocated to this state with an
unauthorized risk retention group or unauthorized insurer, pursuant to the Federal Liability Risk
Retention Act of 1986 and this chapter, shall file with the commissioner a summary memorandum, in a
form the commissioner prescribes or accepts, setting forth the facts concerning the placement of such
insurance so as to identify the coverage and the tax payable to the state relative thereto pursuant to
North Dakota Century Code chapter 26.1-44. The risk retention group representative or purchasing
group representative shall file this memorandum with the commissioner on or before April first of each
year in which the premium or consideration is due. Any risk retention group representative or
purchasing group representative may contract with the unauthorized risk retention group or
unauthorized insurer or with a purchasing group for which it acts to provide for the unauthorized risk
retention group, the unauthorized insurer, or the purchasing group filing this memorandum on behalf of
the risk retention group representative or purchasing group representative in accordance with this
section, provided the risk retention group representative or purchasing group representative notifies the
commissioner of such delegation and files with the commissioner a copy of the contract authorizing
such alternative method of filing prior to the effective date of such delegation.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-10. Direct production.

1. Any risk retention group required to register in this state pursuant to section 3(d) of the
Federal Liability Risk Retention Act of 1986 or section 45-05-05-02 which utilizes risk retention
representatives in soliciting, negotiating, procuring, or providing liability insurance for its
members located or resident within this state shall do so only through risk retention group
representatives licensed in this state pursuant to North Dakota Century Code chapters
26.1-26, 26.1-44, and 26.1-46 and this chapter provided, however, nothing herein may be
construed to prevent such a risk retention group from soliciting, negotiating, procuring, or
providing liability insurance for its members located or resident within this state directly
through its officers, directors, owners, partners, trustees, or full-time salaried employees not
so licensed in this state.
2. Any purchasing group required to file notice of its intent to do business in this state pursuant
to section 4(d)(1) of the Federal Liability Risk Retention Act of 1986, North Dakota Century
Code section 26.1-46-07, or section 45-05-05-03 which utilizes purchasing group

representatives in soliciting, negotiating, procuring, or providing liability insurance for its
members located or resident within this state shall do so only through purchasing group
representatives licensed in this state pursuant to North Dakota Century Code chapters
26.1-26, 26.1-44, and 26.1-46, and this chapter.
History: Effective October 1, 1989.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46
### § 45-05-05-11. Solicitation by nonresident.

Repealed effective January 1, 2008.
### § 45-05-05-12. Severability.

If any section of this chapter or the application thereof to any person or circumstance is for any
reason held to be invalid, the remainder of this chapter and the application of such section to other
persons and circumstances shall not be affected thereby.
History: Effective October 1, 1989; amended effective January 1, 2008.
General Authority: NDCC 26.1-46-13, 28-32-02
Law Implemented: NDCC 26.1-46

We, the undersigned President (or Chief Executive Officer)
and Secretary,
on behalf of ____________________________________, make
(Name of Purchasing Group)
application for registration in North Dakota as a Purchasing Group ("Group") and do hereby affirm
that:
1. The Group is domiciled in the State of _____________________.
2. The Group's principal place of business (street and mailing address) is:
___________________________________________________________________________
__________________________________________________________________________
3. The Group is composed of members whose business 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 (Give general description
of business or activities engaged in by Group members):
___________________________________________________________________________
___________________________________________________________________________
4. The Group has as one of its purposes the purchase of liability insurance on a group basis.
5. The Group purchases such liability insurance only for its group members and only to cover
their similar or related liability exposure, as described in item (3) above.
6. The Group intends to purchase the following lines and classifications of liability insurance:
___________________________________________________________________________
___________________________________________________________________________
__________________________________________________________________________
7. The Group intends to purchase the liability insurance described in item (6) above from the
following insurance company or companies (Give full name of company and state of domicile):
___________________________________________________________________________
___________________________________________________________________________
8. The name and address of the insurance producer licensed by the insurance commissioner
through whom purchases in North Dakota will be effected are as follows:
___________________________________________________________________________
___________________________________________________________________________
__________________________________________________________________________
9. The Group has designated the insurance commissioner of North Dakota to be its agent solely
for the purpose of receiving service of legal documents.
10. The Group's federal identification number is: _________________
We do hereby swear and affirm that the aforementioned statements and
information are true and correct.
President or Chief Executive Officer
Secretary

Sworn to before me this _________
day of __________________, 20__,
_____________________________
Notary Public
State of ______________________
My Commission Expires: ________

We, the undersigned President (or Chief Executive Officer) and Secretary,
on behalf of ______________________________________________________________________
________________________________________________________________________________
(Name must include the phrase "Risk Retention Group")
located at ________________________________________________________________________
make application for registration in North Dakota as a Risk Retention Group
("Group") and do hereby affirm that:
1. The primary activity of this Group consists of assuming and spreading all, or any portion, of
the liability exposure of its Group members.
2. The Group is organized for the primary purpose of conducting the activity described under (1)
above.
3. The Group is chartered and licensed as a liability insurance company under the laws of the
State of ______________________, and is authorized to engage in the business of insurance
under the laws of its chartering state.
4. The Group does not exclude any person from its membership in the Group solely to provide
for members of the Group a competitive advantage over such a person.
5. Ownership of the Group consists of one or the other of the following (check one):
____________ the owners of the Group are only persons who comprise the membership of
the Group and who are provided insurance by the Group;
____________ the sole owner of the Group is
(Give name and address of organization)
an organization whose members only comprise the membership of the Group, and whose
owners are only persons who comprise the membership of the Group and who are provided
insurance by the Group.
6. The Group is composed of members who are engaged in the following described business or
activities, which are similar or related with respect to the liability to which such members are
exposed by virtue of related, similar, or common business, trade, produce, services, premises
or operations (Give general description of business or activities engaged in by Group
members):

7. The activities of the Group do not include the provision of insurance other than:
a. liability insurance for assuming and spreading all or any portion of the similar or related
liability exposure of its group members; and
b. reinsurance with respect to the similar or related liability exposure of another risk
retention group (or a member of such other risk retention group) engaged in businesses
or activities which qualify such other risk retention group (or member) under item (6)
above for membership in this Group.
8. The Group will comply with the unfair claim settlement practices laws of North Dakota.
9. The Group will pay, on a nondiscriminatory basis, applicable premium and other taxes which
are levied on admitted insurers under the laws of North Dakota.
10. The Group will participate, on a nondiscriminatory basis, in any mechanism established or
authorized under the laws of North Dakota for the equitable apportionment among insurers of
liability insurance losses and expenses incurred on policies written through such mechanism.
11. The Group has designated the Insurance Commissioner of North Dakota to be its agent solely
for the purpose of receiving service of legal documents or process.
12. The Group will submit to examination by the Insurance Commissioner to determine the
Group's financial condition, if:
a. the Insurance Commissioner of the Group's chartering state has not begun or has
refused to initiate an examination of the Group; and
b. any such examination by the Insurance Commissioner is coordinated so as to avoid
unjustified duplication and unjustified repetition.
13. The Group will comply with a lawful order issued in a delinquency proceeding commenced by
the Insurance Commissioner upon a finding of financial impairment, or in a voluntary
dissolution proceeding.
14. The Group will comply with the laws of North Dakota concerning deceptive, false or fraudulent
acts or practices, including any injunctions regarding such conduct obtained from a court of
competent jurisdiction.
15. The Group will comply with an injunction issued by a court of competent jurisdiction upon
petition by the Insurance Commissioner alleging that the Group is in hazardous financial
condition or is financially impaired.
16. The Group will provide the following notice, in 10-point type, in any insurance policy issued by
the Group:
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."

17. The Group has submitted to the Insurance Commissioner, as part of this application and
before it has offered any insurance in North Dakota, a copy of the plan of operation or
feasibility study which it has filed with the Insurance Commissioner of its chartering state. The
plan or study submitted herewith discloses the name of the state in which the Group is
chartered, as well as the Group's principal place of business, and such plan or study further
includes the coverages, deductibles, coverage limits, rates, and rating classification systems
for each line of insurance the Group intends to offer. The Group will promptly submit to the
Insurance Commissioner any revisions of such plan or study to reflect any changes therein
including, but without limitation, additional lines of liability insurance which the Group intends
to offer, and any change in the designation of the Group's chartering state.
18. The Group has submitted to the Insurance Commissioner, as part of this application, a copy of
the Group's annual financial statement submitted to the state in which it is chartered as an
insurance company. The annual financial statement has been certified by an independent
public accountant and contains a statement of opinion on loss and loss adjustment expense
reserves made by a member of the American Academy of Actuaries or a qualified loss reserve
specialist. Hereafter, the Group will submit its annual financial statement to the Insurance
Commissioner by March 1 of each year.
19. The Group will not solicit or sell insurance to any person in North Dakota who is not eligible for
membership in the Group.
20. The Group will not solicit or sell insurance in North Dakota, or otherwise operate in this state, if
the Group is financially impaired or is in a hazardous financial condition.
21. The name and address of the insurance producer(s) licensed by the Insurance Commissioner
through whom purchases in North Dakota will be effected are as follows:
22. The Group's federal identification number is ________.
We do hereby swear and affirm that the aforementioned statements and information are true and
correct.
President or Chief Executive Officer
Secretary
Sworn to before me this day of
_______________________, 20__.
______________________________
Notary Public, State of:
My Commission Expires:

The (name of group) , a [risk retention] [purchasing] group authorized to transact liability insurance
under the Federal Liability Risk Retention Act of 1986 and Chapter 26.1-46 of the North Dakota Century
Code, domiciled in the State of _____________ and whose principal place of business is located at
(address)____________ (city) ________ (state) ______ (zip code)_______ does hereby constitute,
designate and appoint the Insurance Commissioner of the State of North Dakota, and the
commissioner's successors in office, as its true and lawful agent to receive legal documents and
service of process issued against said [risk retention] [purchasing] group in the State of North Dakota.
This appointment shall be irrevocable, shall be binding upon the group, and its successors in interest,
as to the assets and liabilities of the group and shall remain in full force and effect for so long as there
is in force any contract or certificate insuring any member [of the risk retention group] [of the purchasing
group] in the State of North Dakota or any obligation of the group arising out of its transactions in the
State of North Dakota.
The [risk retention] [purchasing] group hereby designates the following person as the person to
whom legal documents and process against it served shall be forwarded by the Insurance
Commissioner:
(name) , (title)
(company or group name) , (street address)
(city) , (state) (zip code)
IN WITNESS WHEREOF, the said [risk retention] [purchasing] group has caused this appointment
to be duly executed this ____ day of __________, 20__.
(name of group)
[President, Chief Executive
Officer, Secretary, Partner,
Trustee, or title of the officer or
(SEAL) party who under the
organization of the group has
authority to bind the group with
that person's signature]
State of _______________)
) ss
County of ______________)

The foregoing instrument was acknowledged and executed before me this _____ day of
_______________, 20__.
______________________________
(SEAL) My Commission Expires: _________
