Risk Retention Groups

Question 1

risk retention group definition

Answer 1

a group of similar businesses that creates its own liability insurance company, chartered under regulations for traditional insurance or captives

Question 2

Liability Risk Retention Act (LRRA)

Answer 2

• passed in response to restricted availability of commercial liability insurance in the mid-1980s
• allows RRGs licensed in one state to operate in all other states with minimal additional regulation

Question 3

state of RRG market

Answer 3

• most common line is medical malpractice

* market remains strong and will likely remain solvent if faced with deteriorating losses or adverse economic conditions

Question 4

conclusions of GAO report on RRGs (2)

Answer 4

• RRGs have a small but important effect on their niche markets
• RRGs would benefit from more consistent regulation by the states

Question 5

difference between regulation of RRGs and traditional insurers (3)

Answer 5

• many RRGs file GAAP statements with a reconciliation to SAP
• few RRGs required to submit rate and form filings
• LRRA specifically disallows RRGs from participating in guaranty funds