a risk retention group (RRG)

Risk Retention Groups Explained

Businesses in a variety of sectors are increasingly experiencing barriers to securing and retaining viable insurance plans to cover their liability exposures. Their current insurer may no longer wish to underwrite the risks inherent to their industry or they are subjected to repeated premiums increases, despite having a favorable loss ratio. For companies facing these issues, forming a risk retention group (RRG) may offer an advantageous alternative to the traditional insurance marketplace.

What Are Risk Retention Groups?

RRGs are created by groups of companies within the same industry that have similar liability profiles. These companies unite to create an insurance facility that assumes and spreads the liability exposure of its member companies. RRGs can engage in providing the following types of insurance:

General liability
• Errors and omissions
• Professional liability
• Directors and officers
• Medical malpractice

What Are the Advantages of RRGs?

RRGs present many benefits. Members of these groups have both increased control over their insurance programs and stabilized premiums. Moreover, they are able to customize their risk management practices and operate in several states without obtaining multiple licenses. Members may also receive dividend payments during years with low loss ratios.

Many companies are facing a stricter insurance marketplace. At the same time, they are also subjected to increased risk and a more rigorous regulatory environment. Establishing an RRG can help them meet these challenges by ensuring that their companies and employees are insured for nearly every eventuality at a predictable cost.

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