Qualified Risk Manager Definition: Four Ways to Qualify

A Qualified Risk Manager, as defined in the Nonadmitted and Reinsurance Reform Act of 2010, is a person who meets specific federal education and experience standards and who performs skilled insurance and risk services for a large commercial policyholder. The definition sits at 15 USC 8206 and exists for one practical reason: a company cannot claim Exempt Commercial Purchaser status, and therefore cannot bypass the diligent-search requirement when buying surplus lines coverage, unless it employs or retains someone who meets this standard.¹ Size and premium volume alone will not do it. There has to be a qualified human in the role.

The Four Ways to Qualify

Federal law lays out four separate pathways. A person needs to satisfy only one, but the details of each matter, because a misreading can disqualify an entire insurance placement.¹

Bachelor’s Degree Plus Experience or a Designation

The first pathway starts with a bachelor’s degree from an accredited college or university in risk management, business administration, finance, economics, or a related field approved by a state insurance commissioner. On top of the degree, the person needs either three years of professional experience in risk financing, claims administration, loss prevention, or commercial insurance purchasing, or one of the recognized professional designations listed below.¹ Three years of work or a certification. Not both.

Seven Years of Experience Plus a Designation

Someone without a relevant degree can still qualify with at least seven years of professional experience combined with a recognized designation. This pathway requires both. Neither the experience nor the certification is sufficient on its own.¹

Ten Years of Experience Alone

A person with at least ten years of experience in risk financing, claims administration, loss prevention, insurance analysis, or purchasing commercial insurance qualifies without any degree or professional designation. This is the pathway for career professionals whose expertise was built entirely on the job.¹

Graduate Degree

A graduate degree from an accredited institution in risk management, business administration, finance, economics, or an approved related field satisfies the education-and-experience component by itself. The statute attaches no additional years-of-experience requirement to this pathway, though the person still has to meet the other statutory requirements covered below.¹

Which Designations Count

Several professional certifications satisfy the designation requirement for the pathways that call for one:

Chartered Property and Casualty Underwriter (CPCU), issued by the American Institute for CPCU/Insurance Institute of America
Associate in Risk Management (ARM), issued by the American Institute for CPCU/Insurance Institute of America
Certified Risk Manager (CRM), issued by the National Alliance for Insurance Education and Research
RIMS Fellow (RF), issued by the Global Risk Management Institute
Any other designation, certification, or license that a state insurance commissioner determines demonstrates minimum competency in risk management

That last line is a catch-all. State regulators can approve additional credentials beyond the four named in the statute, which means the list of acceptable designations can vary slightly from state to state.¹ If a candidate holds a credential not on the named list, the question goes to the home state commissioner.

What the Person Has to Actually Do

Credentials get someone over the first bar. The statute sets a second one: the person must actually perform skilled services in loss prevention, loss reduction, insurance coverage analysis, and purchasing insurance for the commercial policyholder.¹ This is not a title to hold on paper while someone else handles the work.

In practice, the Qualified Risk Manager evaluates the company’s specific exposures, reviews what coverage is needed, and handles selection and negotiation of insurance programs to address those risks. Active involvement in assessing the risk profile, comparing coverage options, and negotiating policy terms is what gives regulators confidence that the company is making an informed decision when it moves into the nonadmitted market.

Employee or Outside Consultant

The Qualified Risk Manager can be either an employee of the commercial policyholder or a third party retained by it.¹ Both arrangements satisfy the federal definition equally, and the same qualification standards apply either way. Larger companies with continuous, complex risk management work often fill the role with an in-house hire. Companies with more specialized or intermittent needs may retain an outside consultant.

There is one structural line the statute draws. The surplus lines broker placing the coverage cannot serve as the purchaser’s Qualified Risk Manager. The person must work for, or be retained by, the purchaser, not the insurance intermediary. The reason is straightforward: the person evaluating whether nonadmitted coverage is appropriate should not be the same person earning a commission on placing it.

Proving It to the Broker

A company claiming Exempt Commercial Purchaser status needs to prove its Qualified Risk Manager meets every statutory element. The documentation file should include the individual’s educational credentials with degree titles and conferring institutions, any professional designation certificates with issuing organizations and dates, and a detailed employment history showing the required years of relevant experience. If the person qualifies through one of the experience-based pathways, the work history has to clearly show time spent in risk financing, claims handling, loss prevention, insurance analysis, or commercial insurance purchasing.

That package goes to the surplus lines broker, who is responsible for verifying the purchaser’s exempt status before placing coverage with a nonadmitted carrier. Many states require brokers to collect signed affidavits in which the Qualified Risk Manager attests under penalty of perjury that they meet the statutory criteria, and brokers keep those records on file to satisfy state audits. Once the broker confirms the qualifications and the company’s financial thresholds, the placement can proceed without the diligent search of the admitted market that would otherwise be required.²

Why the Definition Matters

The whole point of qualifying someone as a Qualified Risk Manager is to unlock Exempt Commercial Purchaser treatment. Normally, when a broker places insurance with a nonadmitted carrier, the broker must first conduct a diligent search of the admitted market to confirm the coverage is not available from a state-licensed insurer. For large, sophisticated businesses, that search is often a formality that delays coverage they already know they can only get from a surplus lines carrier.

Exempt Commercial Purchaser status removes that search requirement, provided the broker has told the purchaser that similar coverage might be available from admitted insurers with stronger regulatory protections, and the purchaser has then asked in writing that the broker proceed with a nonadmitted insurer anyway.² The Qualified Risk Manager requirement is what gives that waiver its credibility: the law assumes the purchaser understands the tradeoff because a qualified professional on its side has evaluated it.

Qualification is only one piece of Exempt Commercial Purchaser status. The company also has to meet premium and size thresholds set out in the same statute, including a floor of more than $100,000 in commercial property and casualty premiums over the prior twelve months, along with one of several alternative tests tied to net worth, revenue, employee count, nonprofit budget, or municipal population.¹ Those dollar figures are adjusted every five years for inflation, so a company near a threshold should confirm the current numbers with its broker or state insurance department before relying on them.

1
Office of the Law Revision Counsel. 15 USC 8206 – Definitions
2
Office of the Law Revision Counsel. 15 USC 8205 – Streamlined Application for Commercial Purchasers