Sections 44-4401 to 44-4423 shall be known and may be cited as the Risk Retention Act.

The purpose of the Risk Retention Act is to regulate the formation and operation of risk retention groups in this state formed under the federal Liability Risk Retention Act of 1986 and to regulate the operation of purchasing groups in this state formed under the federal Liability Risk Retention Act of 1986.

For purposes of the Risk Retention Act, unless the context otherwise requires:

(1) Commissioner shall mean the commissioner, director, or superintendent of insurance in any other state;

(2) Completed operations liability shall mean 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 the work or (b) any person who hires an independent contractor to perform the work. The term shall include liability for activities completed or abandoned before the date of the occurrence giving rise to the liability;

(3) Department shall mean the Department of Insurance;

(4) Director shall mean the Director of Insurance;

(5) Domicile, for purposes of determining the state in which a purchasing group is domiciled, shall mean (a) for a corporation, the state in which the purchasing group is incorporated and (b) for an unincorporated entity, the state of its principal place of business;

(6) Hazardous financial condition shall mean that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able to (a) meet obligations to policyholders with respect to known claims and reasonably anticipated claims or (b) pay other obligations in the normal course of business;

(7) Insurance shall mean primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this state;

(8) Liability shall mean legal liability for damages, including the cost of defense, legal costs and fees, and other claim expenses, for injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of (a) any profit or nonprofit business, trade, product, services, including professional services, premises, or operations or (b) any activity of any state or local government or any agency or political subdivision thereof. The term shall not include personal risk liability, workers' compensation, and an employer's liability with respect to its employees other than legal liability under the Federal Employers' Liability Act, 45 U.S.C. 51 et seq.;

(9) Personal risk liability shall mean liability for damages for injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities rather than from responsibilities or activities referred to in subdivision (8) of this section;

(10) Plan of operation or a feasibility study shall mean an analysis which presents the expected activities and results of a risk retention group including at a minimum:

(a) Information sufficient to verify that its members are engaged in businesses or activities 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;

(b) The coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer;

(c) Historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that such experience is reasonably available;

(d) Pro forma financial statements and projections;

(e) Appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;

(f) Identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies, and reinsurance agreements;

(g) 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 such state; and

(h) Such other matters as may be prescribed by the commissioner of the state in which the risk retention group is chartered and licensed for liability insurance companies authorized by the insurance laws of that state;

(11) Product liability shall mean liability for damages for any personal injury, death, emotional harm, consequential economic damage, or property damage, including damages resulting from loss of use of property, arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product but shall not include the liability of any person for such damages if the product involved was in the possession of the person when the incident giving rise to the claim occurred;

(12) Purchasing group shall mean any group which:

(a) Has as one of its purposes the purchase of liability insurance on a group basis;

(b) Purchases such insurance only for its members and only to cover their similar or related liability exposure as described in subdivision (c) of this subdivision;

(c) Is composed of members whose businesses 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; and

(d) Is domiciled in any state;

(13) Risk retention group shall mean a corporation or other limited liability association formed under the laws of any state, Bermuda, or the Cayman Islands:

(a) Whose primary activity consists of assuming and spreading all or part of the liability exposure of its members;

(b) That is organized for the primary purpose of conducting the activity described under subdivision (a) of this subdivision;

(c) That (i) is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state or (ii) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability as such terms were defined in the federal Product Liability Risk Retention Act of 1981 before the date of the enactment of the Risk Retention Act of 1986;

(d) That does not exclude any person from membership in a group solely to provide members of such group a competitive advantage over such person;

(e) That (i) has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group or (ii) has as its sole owner an organization which has as (A) its members only persons who comprise the membership of the risk retention group and (B) its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group;

(f) Whose members are engaged in businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;

(g) Whose activities do not include the provision of insurance other than (i) liability insurance for assuming and spreading all or any portion of the liability of its group members and (ii) reinsurance with respect to the liability of any other risk retention group or any members of such other group that is engaged in businesses or activities so that such group or member meets the requirement described in subdivision (f) of this subdivision from membership in the risk retention group which provides such reinsurance; and

(h) The name of which includes the phrase Risk Retention Group; and

(14) State shall mean any state of the United States or the District of Columbia.

(1) A risk retention group seeking to be chartered and licensed in this state shall be chartered and licensed as a liability insurance company under Chapter 44 and, except as provided elsewhere in the Risk Retention Act, shall comply with all of the laws, rules, and regulations applicable to such insurers chartered and licensed in this state and with sections 44-4405 to 44-4413 to the extent such requirements are not a limitation on laws, rules, or regulations of this state.

(2) Before a risk retention group may offer insurance in any state, it shall submit for approval to the director a plan of operation and revisions of such plan if the group intends to offer any additional lines of liability insurance.

(3) At the time of filing its application for a charter and license, the risk retention group shall provide to the director in summary form the following information: The identity of the initial members of the group; the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group; the amount and nature of initial capitalization; the coverages to be afforded; and the states in which the group intends to operate. Upon receipt of this information, the director shall forward such information to the National Association of Insurance Commissioners. Providing notification to the National Association of Insurance Commissioners shall be in addition to and shall not be sufficient to satisfy the requirements of section 44-4405 or any other sections of the act.

(4) Subsections (5) through (11) of this section provide governance standards for risk retention groups licensed and chartered in this state. Any risk retention group in existence on January 1, 2017, shall be in compliance with such standards by January 1, 2018. Any risk retention group that is initially licensed on or after January 1, 2017, shall be in compliance with such standards at the time of licensure.

(5)(a) For purposes of this subsection:

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

(ii) Director means a natural person designated in the articles of the risk retention group or designated, elected, or appointed by any other manner, name, or title to act as a director.

(b) The board of directors of the risk retention group shall have a majority of independent directors. If the risk retention group is a reciprocal, then the attorney in fact would be required to adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group’s board of directors or subscribers advisory committee under this subsection. To the extent permissible under state law, service providers of a reciprocal risk retention group should contract with the risk retention group and not the attorney in fact.

(c) No director qualifies as independent unless the board of directors affirmatively determines that the director has no material relationship with the risk retention group. Each risk retention group shall disclose these determinations to its domestic regulator at least annually. For this purpose, any person that is a direct or indirect owner of or subscriber in the risk retention group, or is an officer, director, or employee of such an owner and insured unless some other position of such officer, director, or employee constitutes a material relationship, as contemplated by section 3901(a)(4)(E)(ii) of the federal Liability Risk Retention Act of 1986, is considered to be independent.

(d) Material relationship of a person with the risk retention group includes, but is not limited to:

(i) The receipt in any one twelve-month period of compensation or payment of any other item of value by such person, a member of such person’s immediate family, or any business with which such person is affiliated from the risk retention group or a consultant or service provider to the risk retention group is greater than or equal to five percent of the risk retention group’s gross written premium for such twelve-month period or two percent of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in such a twelve-month period. Such person or immediate family member of such person is not independent until one year after his or her compensation from the risk retention group falls below the threshold;

(ii) A relationship with an auditor as follows: A director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one year after the end of the affiliation, employment, or auditing relationship; and

(iii) A relationship with a related entity as follows: A director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group’s present executives serve on that other company’s board of directors is not independent until one year after the end of such service or the employment relationship.

(6)(a) The term of any material service provider contract with the risk retention group shall not exceed five years. Any such contract, or its renewal, shall require the approval of the majority of the risk retention group’s independent directors. The risk retention group’s board of directors shall have the right to terminate any service provider, audit, or actuarial contracts at any time for cause after providing adequate notice as defined in the contract. The service provider contract is deemed material if the amount to be paid for such contract is greater than or equal to five percent of the risk retention group’s annual gross written premium or two percent of its surplus, whichever is greater.

(b) For purposes of this subsection, service providers shall include captive managers, auditors, accountants, actuaries, investment advisors, lawyers, managing general underwriters, or other parties responsible for underwriting, determination of rates, collection of premiums, adjusting and settling claims, or the preparation of financial statements. Any reference to lawyers in this subdivision does not include defense counsel retained by the risk retention group to defend claims, unless the amount of fees paid to such lawyers are material as referenced in subdivision (5)(d) of this section.

(c) No service provider contract meeting the definition of material relationship contained in subdivision (5)(d) of this section shall be entered into unless the risk retention group has notified the director in writing of its intention to enter into such transaction at least thirty days prior thereto and the director has not disapproved it within such period.

(7) The risk retention group’s board of directors shall adopt a written policy in the plan of operation as approved by the board that requires the board to:

(a) Assure that all owners or insureds of the risk retention group receive evidence of ownership interest;

(b) Develop a set of governance standards applicable to the risk retention group;

(c) Oversee the evaluation of the risk retention group’s management, including, but not limited to, the performance of the captive manager, managing general underwriter, or other party or parties responsible for underwriting, determination of rates, collection of premiums, adjusting or settling claims, or the preparation of financial statements;

(d) Review and approve the amount to be paid for all material service providers; and

(e) Review and approve, at least annually:

(i) The risk retention group’s goals and objectives relevant to the compensation of officers and service providers;

(ii) The officers’ and service providers’ performance in light of those goals and objectives; and

(iii) The continued engagement of the officers and material service providers.

(8)(a) The risk retention group shall have an audit committee composed of at least three independent board members as described in subsection (5) of this section. A nonindependent board member may participate in the activities of the audit committee, if invited by the members, but cannot be a member of such committee.

(b) The audit committee shall have a written charter that defines the committee’s purpose, which, at a minimum, must be to:

(i) Assist board oversight of (A) the integrity of the financial statements, (B) the compliance with legal and regulatory requirements, and (C) the qualifications, independence, and performance of the independent auditor and actuary;

(ii) Discuss the annual audited financial statements and quarterly financial statements with management;

(iii) Discuss the annual audited financial statements with its independent auditor and, if advisable, discuss its quarterly financial statements with its independent auditor;

(iv) Discuss policies with respect to risk assessment and risk management;

(v) Meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors;

(vi) Review with the independent auditor any audit problems or difficulties and management’s response;

(vii) Set clear hiring policies of the risk retention group as to the hiring of employees or former employees of the independent auditor;

(viii) Require the external auditor to rotate the lead or coordinating audit partner having primary responsibility for the risk retention group’s audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for more than five consecutive fiscal years; and

(ix) Report regularly to the board of directors.

(c) The domestic regulator may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the domestic regulator that it is impracticable to do so and the risk retention group’s board of directors itself is otherwise able to accomplish the purposes of an audit committee as described in subdivision (8)(b) of this section.

(9) The board of directors shall adopt and disclose governance standards, where disclose means making such information available through electronic or other means, including the posting of such information on the risk retention group’s website, and providing such information to members or insureds upon request, which shall include:

(a) A process by which the directors are elected by the owners or insureds;

(b) Director qualification standards;

(c) Director responsibilities;

(d) Director access to management and, as necessary and appropriate, independent advisors;

(e) Director compensation;

(f) Director orientation and continuing education;

(g) The policies and procedures that are followed for management succession; and

(h) The policies and procedures that are followed for annual performance evaluation of the board.

(10) The board of directors shall adopt and disclose a code of business conduct and ethics for directors, officers, and employees and promptly disclose to the board of directors any waivers of the code for directors or executive officers, which should include the following topics:

(a) Conflicts of interest;

(b) Matters covered under the corporate opportunities doctrine under the state of domicile;

(c) Confidentiality;

(d) Fair dealing;

(e) Protection and proper use of risk retention group assets;

(f) Compliance with all applicable laws, rules, and regulations; and

(g) Requiring the reporting of any illegal or unethical behavior which affects the operation of the risk retention group.

(11) The captive manager, president, or chief executive officer of the risk retention group shall promptly notify the domestic regulator in writing if he or she becomes aware of any material noncompliance with any of the governance standards provided in subsections (5) through (11) of this section.

Risk retention groups chartered and licensed in states other than this state and seeking to do business as a risk retention group in this state shall observe and abide by the laws of this state as follows:

(1) Before offering insurance in this state, a risk retention group shall submit to the director:

(a) A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, the date of chartering and licensing, its principal place of business, and such other information, including information on its membership, as the director may require to verify that the risk retention group is qualified under subdivision (13) of section 44-4403. The identity and location of specific group members shall not be considered public record, except that such information may be provided to other state, federal, foreign, and international regulatory and law enforcement agencies and the National Association of Insurance Commissioners and its affiliates and subsidiaries if the recipient agrees in writing to maintain the confidentiality of the documents, material, or other information. The director may receive such information regarding the identity and location of specific group members from other state, federal, foreign, or international regulatory and law enforcement agencies and from the National Association of Insurance Commissioners and its affiliates and subsidiaries. The director shall maintain as confidential or privileged information received pursuant to this subdivision with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the information. Such information shall not be a public record subject to disclosure by the director pursuant to sections 84-712 to 84-712.09, subject to subpoena, subject to discovery, or admissible in evidence in any private civil action, except that the director may use such information in any regulatory or legal action brought by the director. The director, and any other person while acting under the authority of the director who has received information pursuant to this subdivision, may not, and shall not be required to, testify in any private civil action concerning any information subject to this section. Nothing in this section shall constitute a waiver of any applicable privilege or claim of confidentiality in the information received pursuant to this subdivision as a result of information sharing authorized by this section;

(b) A copy of its plan of operation or a feasibility study and revisions of such plan or study submitted to the state in which the risk retention group is chartered and licensed, except that the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance which (i) was defined in the federal Product Liability Risk Retention Act of 1981 before October 27, 1986, and (ii) was offered before such date by any risk retention group which had been chartered and licensed and operating for not less than three years before such date. The risk retention group shall submit a copy of any revision to its plan of operation or feasibility study required by subsection (2) of section 44-4404 at the same time that such revision is submitted to the state in which the risk retention group is chartered and licensed; and

(c) A statement of registration which designates the director as its agent for the purpose of receiving service of legal documents or process; and

(2) Any risk retention group doing business in this state shall submit to the director:

(a) A copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed which shall 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 under criteria established by the National Association of Insurance Commissioners;

(b) A copy of each examination of the risk retention group as certified by the commissioner or public official conducting the examination;

(c) Upon request by the director, a copy of any audit performed with respect to the risk retention group; and

(d) Such information as may be required to verify its continuing qualification as a risk retention group under subdivision (13) of section 44-4403.

All premiums paid for coverage within this state to risk retention groups shall be subject to taxation at the same rate and subject to the same interest, fines, and penalties for nonpayment as that applicable to foreign admitted insurers, and it shall be the responsibility of each risk retention group to report and pay such taxes whether or not the group is licensed as an insurance company in this state and whether or not agents or brokers are utilized.

Any risk retention group shall comply with and be subject to the Unfair Insurance Trade Practices Act and any rule or regulation issued under the act. Any risk retention group and its agents and representatives shall comply with and be subject to the Unfair Insurance Claims Settlement Practices Act and any rule or regulation issued under the act. If the director seeks an injunction regarding such conduct, the injunction shall be obtained from a court of competent jurisdiction.

Any risk retention group shall submit to an examination by the director to determine its financial condition if the commissioner of the state in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within sixty days after a request by the director. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the National Association of Insurance Commissioner's Examiner Handbook.

Any application form for insurance from a risk retention group and any policy issued by a risk retention group shall contain, in ten-point type on the front page and the declaration page, the following notice:

NOTICE

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.

A risk retention group shall not:

(1) Solicit or sell insurance to any person who is not eligible for membership in such group; or

(2) Solicit or sell insurance or operate in a hazardous financial condition or financially impaired condition.

A risk retention group shall not do business in this state if an insurance company is directly or indirectly a member or owner of such group, other than in the case of a risk retention group all of whose members are insurance companies.

A risk retention group may not offer insurance coverage prohibited by Chapter 44 or declared unlawful by the Supreme Court.

A risk retention group which is not chartered and licensed in this state and which is doing business in this state shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by the director or the commissioner of any other state if there has been a finding of financial impairment after an examination under section 44-4408.

(1) A risk retention group shall not join or contribute financially to any insurance insolvency guaranty fund or similar mechanism in this state nor shall any risk retention group or its insureds receive any benefit from any such fund for claims arising out of operations of such risk retention group.

(2) When a purchasing group obtains insurance covering its members' risks from an insurer not admitted in this state or a risk retention group, no such risks, wherever resident or located, shall be covered by any insurance insolvency guaranty fund or similar mechanism in this state.

(3) When a purchasing group obtains insurance covering its members' risks from an insurer admitted in this state, only risks resident or located in this state shall be covered by the Nebraska Property and Liability Insurance Guaranty Association Act.

Any purchasing group meeting the criteria established under the federal Liability Risk Retention Act of 1986 shall be exempt from any law of this state relating to the creation of groups for the purchase of insurance or to the prohibition of group purchasing or any law that would discriminate against a purchasing group or its members. In addition, an insurer shall be exempt from any law of this state which prohibits providing or offering to provide to a purchasing group or its members advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages, or other matters. A purchasing group shall be subject to all other applicable laws of this state.

(1) A purchasing group which intends to do business in this state shall, prior to doing business, furnish notice to the director which shall:

(a) Identify the state in which the purchasing group is domiciled;

(b) Identify all other states in which the purchasing group intends to do business;

(c) Specify the lines and classifications of liability insurance which the purchasing group intends to purchase;

(d) Identify the insurance company from which the group intends to purchase its insurance and the domicile of such company;

(e) Specify the method by which and the person or persons, if any, through whom insurance will be offered to its members whose risks are resident or located in this state;

(f) Identify the principal place of business of the group; and

(g) Provide such other information as may be required by the director to verify that the purchasing group is qualified under subdivision (12) of section 44-4403.

(2) A purchasing group which intends to do business in this state shall include an initial registration fee of one hundred dollars at the time it furnishes notice to the director pursuant to subsection (1) of this section. A purchasing group shall pay an additional fee of one hundred dollars to the director on October 1 of each year thereafter so long as such registration continues. The fees required by this subsection shall be payable to the department and shall be remitted to the State Treasurer for credit to the Department of Insurance Cash Fund.

(3) A purchasing group shall, within ten days, notify the director of any changes in the items set forth in subsection (1) of this section.

(4) A purchasing group shall register with and designate the director as its agent solely for the purpose of receiving service of legal documents or process, except that such requirement shall not apply in the case of a purchasing group that:

(a) Was domiciled before April 1, 1986, and is domiciled on and after October 27, 1986, in any state of the United States;

(b) Before October 27, 1986, purchased insurance from an insurance carrier licensed in any state;

(c) Since October 27, 1986, purchased its insurance from an insurance carrier licensed in any state;

(d) Was a purchasing group under the requirements of the federal Product Liability Risk Retention Act of 1981 before October 27, 1986; and

(e) Does not purchase insurance that was not authorized for purposes of an exemption under the federal Product Liability Risk Retention Act of 1981 as in effect before October 27, 1986.

(5) Each purchasing group that is required to give notice pursuant to subsection (1) of this section shall also furnish such information as may be required by the director to:

(a) Verify that the entity qualifies as a purchasing group;

(b) Determine where the purchasing group is located; and

(c) Determine appropriate tax treatment.

(1) A purchasing group shall not purchase insurance from a risk retention group that is not chartered and licensed in a state or from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws, rules, and regulations of such state, except that such licensed agent or broker need not be a resident of this state.

(2) A purchasing group which obtains liability insurance from an insurer not admitted in this state or from a risk retention group shall inform each of the members of the purchasing group which have a risk resident or located in this state that such risk is not protected by an insurance insolvency guaranty fund in this state and that such risk retention group or such insurer may not be subject to all insurance laws, rules, and regulations of this state.

(3) No purchasing group may purchase insurance providing for a deductible or self-insured retention applicable to the group as a whole, but coverage may provide for a deductible or self-insured retention applicable to individual members.

(4) Purchases of insurance by purchasing groups are subject to the same standards regarding aggregate limits which are applicable to all purchases of group insurance.

Premium taxes and taxes on premiums paid for coverage of risks resident or located in this state by a purchasing group or any members of the purchasing group shall be:

(1) Imposed at the same rate and subject to the same interest, fines, and penalties as applicable to premium taxes and taxes on premiums paid for similar coverage from a similar insurance source by other insureds; and

(2) Paid first by such insurance source if an insurer admitted in this state and, if not an insurer admitted in this state, by the surplus lines licensee acting as agent or broker for the purchasing group.

The director may make use of any of the powers established under Chapter 44 to enforce the laws of this state if those powers are not specifically preempted by the federal Product Liability Risk Retention Act of 1981 as amended by the Risk Retention Amendments of 1986. Such powers shall include, but not be limited to, administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders, and impose penalties. With regard to any investigation, administrative proceedings, or litigation, the director may rely on the procedural law, rules, and regulations of this state. The injunctive authority of the director in regard to risk retention groups shall be restricted by the requirement that any injunction be issued by a court of competent jurisdiction.

A risk retention group which violates any provision of the Risk Retention Act shall be subject to fines and penalties applicable to licensed insurers generally, including revocation of its license to do business in this state.

(1) Any person other than a licensed surplus lines licensee acting or offering to act as an insurance producer for a risk retention group or purchasing group which solicits members, sells insurance coverage, purchases coverage for its members located within this state, or otherwise does business in this state shall, before commencing any such activity, obtain a license from the director pursuant to the Insurance Producers Licensing Act.

(2) Every person, firm, association, or corporation licensed pursuant to the Insurance Producers Licensing Act, on business placed with risk retention groups or written through a purchasing group, shall inform each prospective insured of the provisions of the notice required by section 44-4409 in the case of a risk retention group and subsection (2) of section 44-4418 in the case of a purchasing group.

An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance or operating in any state, in all states, or in any territory or possession of the United States upon a finding that such group is in a hazardous financial condition shall be enforceable in the courts of this state.

The director shall adopt and promulgate rules and regulations relating to risk retention groups necessary to carry out the Risk Retention Act.