Alternative liability capacity

Risk retention groups, explained plainly

An RRG is a liability insurer owned by the people it insures. That structure solves some problems and creates others.

Where an RRG fits and where it does not

The federal law that authorizes RRGs is specific about what they can write.

Coverage	Can an RRG write it
General liability	Yes
Products liability	Yes
Professional liability	Yes
Commercial auto liability	Yes
Property	No
Workers compensation	No
Personal lines	No

RRG questions

Who can join an RRG?

Businesses in the class the RRG was formed to insure. Membership is not open to the general public.

Is an RRG regulated?

Yes, by its state of domicile and by the states where it registers to operate. It is not backed by a state guaranty fund.

What happens if the RRG becomes insolvent?

Members have no guaranty fund protection. That is the trade-off for the capacity an RRG provides, and it makes the financial strength of the group worth examining carefully.

What to review before joining an RRG

The group's financial statements and surplus position, since there is no guaranty fund
The membership obligations, including any capital contribution or assessment
Which states the group is registered in, and whether yours is one of them
What the group does not write, so the rest of your program can be placed elsewhere

What an RRG is and what it is not

The structure is federally authorized and member-owned.

A risk retention group is a liability insurance company chartered under the federal Liability Risk Retention Act and owned by its members. It exists specifically for liability risks that the conventional market will not write at a workable price.

Because it is member-owned, the members have a direct interest in the underwriting result. Good loss experience benefits the membership rather than a carrier's shareholders.

What it is not: an RRG cannot write property coverage or workers compensation. Those have to be placed separately, which means an RRG is usually one part of a larger program rather than a replacement for it.

RRGs are registered in one state and can operate in others, but each state's registration requirements have to be satisfied.

Ask about RRG eligibility

Tell us the class and the loss history and we will tell you whether an RRG is a fit.