Risk Retention Groups (Liability Coverage)

The purpose of a risk retention group is to enable a group of purchasers to form a mutual risk-financing organisation, similar to a group captive to assume liability business. Risk Retention Groups became allowable by the passing of the Liability Risk Retention Act in 1986 providing that each group was licensed by at least one state. Risk Retention Groups today are normally exempt from the state laws that apply to private insurers however in certain states where they are not chartered they may be subject to state laws, premium taxes and participation in market plans. Individual companies that wish to apply to join a Risk Retention Group need to contact an existing group that is engaged in offering liability coverage for the type of business in which they are engaged. The Risk Retention Group will also need to be licensed in the State in which they are doing business.