Difficulty with securing the right commercial insurance coverage can lead to increasing problems for businesses. Risk Retention Groups (RRGs) are an alternative solution worth exploring for the advantages they offer.
What is an RRG?
A Risk Retention Group is an insurance company formed by businesses within a specific industry. RRGs were made more common due to their inclusion in the Federal Liability Risk Retention Act (LRRA). They cover a small portion of businesses but are important in the industries where they do operate. Many RRGs cover healthcare industry businesses.
An RRG must be domiciled in the state in which it operates. Once licensed, however, it can offer coverage to businesses in other states as long as they fit the industry. Similar to other risk mitigation strategies such as captives, RRGs spread the risk out over a larger base of support.
What Advantages Do They Offer?
There are many advantages of a RRG over other types of coverage. Because they are built around your specific industry, the solutions they offer are tailored to your needs and interests. That means insurance options that cover your highest risk areas. A few of the benefits members can expect to realize include:
- Shared concerns and interests among member businesses
- Profits are retained by members and policyholders
- Access to stable, broad coverage that meets industry-specific needs
- Lower coverage rates
- Risk management programs
Management of your RRG is crucial to its success. Companies that specialize in their operation can help you find the right program for your business’ needs.