What is a Risk Retention Group?

What is a Risk Retention Group?

You may have heard the term risk retention group or RRP and wondered what it means. A risk retention group is a term used to define a type of insurance company that is owned by its members. Members are usually from similar types of businesses, which means they share a similar type of risk and liability. A risk retention group exists to assume liability and spread it between its members.

Are There State or Federal Regulations?

As a whole, insurance is regulated at the state level. This is true for everything except RRG’s. In 1986, The Federal Liability Risk Retention Act was put in place to provide affordable liability insurance options, which were lacking in the 80s. It remains in place today and is still the only insurance regulation on the federal level. Risk-retention groups are federally chartered but still require state licensure. Once an RRG is licensed in the state where it is domiciled, it can do business across state lines without further state licensing.

What Are The Advantages of Using an RRG?

Insurance companies like Caitlin Morgan Insurance Services provide direction for companies that want to be a part of a risk retention group. They can explain some of the advantages that come with a membership that includes the following:

  • not having to worry about multiple state licensing and regulations
  • custom benefits and rate structures
  • more member risk controlĀ 
  • removing market residuals
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