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Risk Retention Groups (RRGs) are a type of captive arrangement created out of the liability insurance crisis in the 1980’s. Risk Retention Groups were created through the Federal Liability Risk Retention Act to help businesses obtain liability insurance. However, they have specific rules that must be followed along with state- specific licensing requirements, meaning having an expert like Specialty Captive Group in your corner is essential.
What is a Risk Retention Group?
Risk Retention Groups, or RRGs, are a type of insurance company where businesses join an RRG to insure themselves specifically around certain types of liability coverage. All policyholders of an RRG are also the RRG’s owners. RRG’s can write liability coverage directly to their policyholders. No licensed rated carrier is required. Healthcare and medical malpractice liability is the most common industry for RRG’s to apply.
The Liability Risk Retention Act (LRRA) is a federal law that was passed in 1986 to increase the availability of commercial liability insurance. The LRRA was created to help businesses, professionals, and municipalities obtain liability insurance after the “liability crisis” of the mid-1980s made it unaffordable or unavailable.
The LRRA expanded on the Product Liability Risk Retention Act of 1981, which allowed businesses with similar liability exposure to form risk retention groups (RRGs) and self-insure. The LRRA allows RRGs to offer all casualty coverages, except workers compensation, to policyholders.
The LRRA also created purchasing groups (PGs), which are exempt from certain state laws, rules, and regulations.
Here are some other things to know about the LRRA:
- RRGs must submit a plan of operation to the insurance commissioner of the state where they are domiciled before offering insurance in any state.
- RRGs may not be subject to all state insurance laws and regulations.
- State insurance insolvency guaranty funds are not available for RRGs.
- RRGs must submit to an examination by the commissioner to determine their financial condition.
What’s the Difference Between Risk Retention Groups and Group Captives?
RRG’s can write liability coverage directly to its policyholders. Group captives cannot. RRG’s can only write liability coverage. Group captives can write Workers Compensation and Property. Group captives are generally reinsurance captives that sit behind a policy issuing carrier. RRG’s can issue policies directly to their policyholders.
Who Needs Risk Retention Groups?
Risk retention groups are good options for businesses in the same industry that have a difficult time obtaining liability coverage.
Coverages
- Auto Liability
- General Liability/Products Liability
- Professional E&O Liability
- Medical Professional Liability
- Umbrella Buffer Liability
- Environmental Liability
Coverage Eligibility
- Proven Track Record of strong cash flow and financial results
- Loss Ratio Less than 60%
- Premiums Greater than $300,000 for any one line of coverage
- Entrepreneurial
- Assuming Risk Already or Willing to Assume Risk in the Future
Policy Highlights
- Underwriting Profit Distributions
- Access and Insight into Root Cause of Loss Data
- Control over Risk Management Program
- Access to Reinsurance Market
- Selection of Service Providers
- Risk Financing and Timing Benefits
- Long Term Stabilization of Insurance Premiums
Intake Form
To submit an Intake Form:
- Click on “Download Intake Form” button below to get Form
- Complete the Intake Form and Save it.
- Email the completed Intake Form to:
Speak to an Expert
Evan Muffly
President
Specialty Captive Group, a division of Specialty Program Group
