The First Department, in a full-fledged opinion by Justice Singh, in a matter of first impression, determined that federal law, the Liability Risk Retention Act (LRRA), preempted New York’s Insurance Law section 3420(d)(2). Therefore defendant foreign risk retention group (RRG) [Preferred Contractors Insurance Company Risk Retention Group LLC (PCIC)], did not need to comply with the timely notice of disclaimer requirement of Insurance Law 3420(d)(2). Plaintiff general contractor, Nadkos, sued PCIC because PCIC claimed it had no duty to defend Nadkos in a construction-accident personal injury case brought by a subcontractor and PCIC had not provided the timely notice of disclaimer required by New York’s Insurance Law. The legal argument is complex and no attempt to fairly summarize it is made here:
Application of Insurance Law § 3420(d)(2) to PCIC or to any other RRG would directly or indirectly regulate these groups in violation of 15 USC § 3902(a)(1). Section 3420(d)(2) alters the rights and obligations of the carrier and insured under the policy by creating additional rights for the injured party, that is not contemplated by the LRRA and not required by all other states. …
This heightened standard requirement in New York impairs an RRG’s ability to operate on a nationwide basis “without being compelled to tailor their policies to the specific requirements of every state in which they do business”… . As Congress has chosen to limit the power of nondomiciliary states to regulate RRGs, the LRRA clearly preempts Insurance Law § 3420(d)(2). Nadkos, Inc. v Preferred Contrs. Ins. Co. Risk Retention Group LLC, 2018 NY Slip Op 03242, First Dept 5-3-18
INSURANCE LAW (FEDERAL RISK RETENTION GROUP (RRG) LAW PREEMPTS NEW YORK INSURANCE LAW’S TIMELY DISCLAIMER OF COVERAGE PROVISION, THEREFORE DEFENDANT FOREIGN RRG DID NOT NEED TO COMPLY WITH NEW YORK’S STATUTORY TIMELY DISCLAIMER REQUIREMENT (FIRST DEPT))/DISCLAIMER (INSURANCE LAW, FEDERAL RISK RETENTION GROUP (RRG) LAW PREEMPTS NEW YORK INSURANCE LAW’S TIMELY DISCLAIMER OF COVERAGE PROVISION, THEREFORE DEFENDANT FOREIGN RRG DID NOT NEED TO COMPLY WITH NEW YORK’S STATUTORY TIMELY DISCLAIMER REQUIREMENT (FIRST DEPT))/PREEMPTION (INSURANCE LAW, FEDERAL RISK RETENTION GROUP (RRG) LAW PREEMPTS NEW YORK INSURANCE LAW’S TIMELY DISCLAIMER OF COVERAGE PROVISION, THEREFORE DEFENDANT FOREIGN RRG DID NOT NEED TO COMPLY WITH NEW YORK’S STATUTORY TIMELY DISCLAIMER REQUIREMENT (FIRST DEPT))/RISK RETENTION GROUP (RRG) (INSURANCE LAW, FEDERAL RISK RETENTION GROUP (RRG) LAW PREEMPTS NEW YORK INSURANCE LAW’S TIMELY DISCLAIMER OF COVERAGE PROVISION, THEREFORE DEFENDAN