Product Liability Risk Retention Act of 1981
PL 97-45 (H.R.2120), enacted 09/25/1981

PUBLIC LAW 97-45—SEPT. 25, 1981 
95 STAT. 949 
Public Law 97-45 
97th Congress 
An Act 
To facilitate the ability of product sellers to establish product liability risk retention 
Sept. 25,1981 
groups, to facilitate the ability of such sellers to purchase product liability insure 
[H.R. 2120] 
ance on a group basis, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of 
America in Congress assembled, 
Pr<*d"ct Liability 
Risk Retention 
« ^ ^ « . -™., « 
Act of 1981. 
SHORT TTTLB 
15 USC 3901 
SECTION 1. This Act may be cited as the ''Product Liability Risk 
Retention Act of 1981". 
DEFINITIONS 
SEC. 2. (a) As used in this Act— 
is use 3901. 
(1) "completed operations liability" means liability arising out 
of 
the installation, maintenance, or repair of 
any product at a site 
which is not owned or controlled by— 
(A) any person who performs that work; or 
(B) 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; 
(2) "msurance" means primary insurance, excess insurance, 
reinsurance, surplus lines insurance, and any other arrange-
ment for shifting and distributing risk which is determined to be 
insurance under applicable State or Federal law; 
(3) "product liabuity" means liability for damages because of 
any personal ii\jury, death, emotional harm, consequential eco-
nomic 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 liabilify 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; 
(4) "risk retention group" means any corporation or other 
limited liability association taxable as a corporation, or as an 
insurance company, formed under the laws of any State, Ber^ 
muda, or the Cayman Islands— 
(A) whose primary activity consists of assuming and 
spreading all, or any portion, of the product liability or 
completed operations liability risk exposure of its group 
members; 
(B) which is organized for the primary purpose of conduct-
ing the activity described under subparagraph (A); 
(C) which is chartered or licensed as an insurance com-
pany and authorized to engage in the business of insurance 
imder the laws of any State, or which is so chartered or 
95 STAT. 950 
PUBLIC LAW 97-45—SEPT. 25, 1981 
licensed and authorized before January 1,1985, under the 
laws of Bermuda or the Cayman Islands, except that any 
group so chartered or licensed and authorized under the 
laws of Bermuda or the Cayman Islands shall be considered 
to be a risk retention group only after it has certified to the 
insurance commissioner of 
at least one State that it satisfies 
the capitalization requirements of 
such State; 
(D) 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; and 
(E) which is composed of members each of whose principal 
activity consists of the manufacture, design, importation, 
distribution, packaging, labeling, lease, or sale of a product 
or products; 
(5) "purchasing group" means any group of persons which has 
as one of its purposes the purchase of product liability or 
completed operations liability insurance on a group basis; and 
(6) "State" means any State of 
the United States or the District 
of Columbia. 
(b) The definition of "product liability" in paragraph (4) of subsec-
tion (a) of this section shall not be construed to affect either the tort 
law or the law governing the interpretation of insurance contracts of 
any State. 
RISK RETENTION GROUPS 
State regulation, 
SEC. 3. (a) Except as provided in this section, a risk retention group 
15^0 3902 
^s exempt from any State law, rule, regulation, or order to the extent 
that such law, rule, regulation, or order would— 
(1) make unlawful, or regulate, directly or indirectljr, the 
operation of a risk retention group except that the jurisdiction in 
which it is chartered may regulate the formation and operation 
of such a group and any State may require such a group to— 
(A) comply with the unfair claim settlement practices law 
of 
the State; 
(B) pay, on a nondiscriminatory basis, applicable premium 
and other taxes which are levied on admitted insurers and 
surplus lines Insurers, brokers, or policyholders under the 
laws of 
the State; 
(C) participate, on a nondiscriminatory basis, in any mech-
anism established or authorized under the law of the State 
for the equitable apportionment among insurers of product 
liability or completed operations liabmly insurance losses 
and expenses incurred on policies written through such 
mechanism; 
(D) submit to the appropriate authority reports and other 
information required of licensed insurers under the laws of a 
State relating solely to product liability or completed oper-
ations liability insurance losses and expenses; 
(E) register with and designate the State insurance com-
missioner as its agent solely for the purpose of receiving 
service of legal documents or process, and, upon request, 
furnish such commissioner a copy of any fiii£mcial report 
submitted by the risk retention group to the commissioner of 
the chartering or licensing 
jurisdiction; 
(F) submit to an examination by the State insurance 
commissioner in any State in which the group is doing 
business to determine the group's financial condition, if— 
PUBLIC LAW 97-45—SEPT. 25, 1981 
95 STAT. 951 
(i) the commissioner has reason to believe the risk 
retention group is in a financially impaired condition; 
and 
(ii) the commissioner of the jurisdiction in which the 
group is chartered has not begun or has refused to 
initiate an examination of 
the group; and 
(G) comply with a lawful order issued in a delinquency 
proceeding commenced by the State insurance commissioner 
if the commissioner of thepurisdiction in which the group is 
chartered has failed to initiate such a proceeding after notice 
of a finding of financial impairment under subparagraph (F) 
of 
this paragraph; 
(2) require or permit a risk retention group to participate in 
any insurance insolvency guaranty association to wmch an 
insurer licensed in the State is re(][uired to belong; 
(3) require any insurance pohcy issued to a risk retention 
group or any member of the group to be coimtersigned by an 
insurance agent or broker resimng in that State; or 
(4) otherwise discriminate agamst a risk retention group or 
any of its members, except that nothing in this section shall be 
construed to affect the applicability of State laws generally 
applicable to persons or corporations. 
O
t
>
) The exemptions specified in subsection (a) apply to— 
(1) product liabiUty or completed operations hability insurance 
coverage provided by a risk retention group for— 
(A) such group; or 
(B) any person who is a member of 
such group; 
(2) the sale of 
product liability or completed operations liability 
insurance coverage for a risk retention group; and 
(3) the provision of insurance related services or management 
services for a risk retention group or any member of such group. 
(c) A State may require that a i)erson acting, or offering to act, as an 
agent or broker for a risk retention group obtain a license from that 
State, except that a State may not impose any qualification or 
requirement which discriminates against a nonresident agent or 
broker. 
PURCHASING GROUPS 
SEC. 4. (a) Except as provided in this section, a purchasing group is 
exempt from any State law, rule, regulation, or order to the extent 
that such law, rule, regulation, or order would— 
(1) prohibit the establishment of a purchasing group; 
(2) make it unlawful for an insurer to provide or offer to 
provide insurance on a basis providing[, to a purchasing group or 
its members, advantages, based on their loss and expense experi-
ence, not afforded to other persons with respect to rates, policy 
forms, coverages, or other matters; 
(3) prohibit a purchasing group or its members from purchas-
ing insurance on the group basis described in paragraph (2) of 
this subsection; 
(4) prohibit a purchasing group from obtaining insurance on a 
group basis because the group has not been in existence for a 
minimum period of time or because any member has not 
belonged to the group for a mininnim period of 
time; 
(5) require that a purchasing group must have a minimum 
number of members, common ownerahip or afOliation, or a 
certain legal form; 
State license 
requirement. 
State regulation, 
exemptions. 
15 use 3903. 
89-194 0-82 
62:QU 
95 STAT. 952 
PUBLIC LAW 97-45-SEPT. 25, 1981 
State license 
requirement. 
Ownership 
interests. 
15 u s e 3904. 
15 u s e 77e. 
15 u s e 78/. 
15 u s e 77q. 
15 u s e 78 j , 
(6) require that a certain percentage of a purchasing group 
must obtain insurance on a group basis; 
(7) require that any insurance policy issued to a purchasing 
group or any members of the group be countersigned by an 
insurance agent or broker residing in that State; or 
(8) otherwise discriminate against a purchasing group or any of 
its members. 
(b) The exemptions specified in subsection (a) apply to— 
(1) product liability or completed operations liability insur-
ance, and comprehensive general liability insurance which 
includes either of 
these coverages, provided to— 
(A) a purchasing group; or 
(B) any person who is a member of 
a purchasing group; and 
(2) the provision of— 
(Aj product liability or completed operations insurance, 
and comprehensive general liability coverage; 
(B) insurance related services; or 
(Q management services; 
to a purchasing group or member of 
the group. 
(c) A State may require that a person acting, or offering to act, as an 
agent or broker for a purchasing group obtain a license from that 
State, except that a State may not impose any (qualification or 
requirement which discriminates against a nonresident agent or 
broker. 
APPLICABILITY OF SECURITIES LAWS 
SEC. 5. (a) The ownership interests of members in a risk retention 
group shall be— 
(1) considered to be exempted securities for purposes of section 
5 of 
the Securities Act of 1933 and for purposes of 
section 12 of 
the 
Securities Exchange Act of 1934; and 
(2) considered to be securities for purposes of the provisions of 
section 17 of the Securities Act of 1933 and the provisions of 
section 10 of 
the Securities Exchange Act of 1934. 
(b) A risk retention group shall not be considered to be an 
investment company for purposes of the Investment Company Act of 
1940 (15 U.S.C. 80a-l et seq.). 
(c) The ownership interests of members in a risk retention group 
shall not be considered securities for purposes of any State blue slqr 
law. 
Approved September 25, 1981. 
LEGISLATIVE HISTORY—H.R. 2120 (S. 1096): 
HOUSE REPORT No. 97-190 (eomm. on Energy and eommerce). 
SENATE REPORT No. 97-172 accompanying S. 1096 (Oomm. on Oommerce, Science, 
and Transportation). 
CONGRESSIONAL REOORD, Vol. 127 (1981): 
July 28, considered and passed House. 
Sept. 11, considered and passed Senate in lieu of S. 1096. 
WEEKLY eOMPILATION OF PRESIDENTIAL DOOUMENTS, Vol. 17, No. 39 (1981): 
Sept. 25, Presidential statement.