NAIC RRG

Question 1

Define an RRG

Answer 1

Risk Retention Group
* a liability insurance company owned by its members
* members are a group of similar businesses that have pooled their risks
* medical malpractice is the most common LOB

Question 2

Formation of an RRG

Answer 2

Formed using a combination of state & federal laws under the auspices of the Federal LRRA (Liability Risk Retention Act):
* must submit a plan of operation to commissioner of domiciliary state that includes coverage, deductibles, limits, rates, classification system

May be formed under a state’s captive or traditional insurance laws

Question 3

Operation of an RRG

Answer 3

• may write business directly in states where they are registered without obtaining a license (captives can’t do this)
• can be domiciled in 1 state but still do business in another state if a registration process is completed and the state’s commissioner is designated as agent for service of process
• treated as multi-state insurers and subject to NAIC accreditation standards for RRGs

Question 4

RRG financial filing requirements

Answer 4

• Financial statements (yellow book format)
• RBC
• SAO
• MD&A (Management’s Discussion and Analysis)
• Audited statements

Question 5

Regulatory differences between RRGs and traditional insurers

Answer 5

• many RRGs use GAAP instead of SAP
• few RRGs submit rate filings
• RRGs can’t participate in state guaranty funds