What is a Risk Retention Group (RRG)?

A Risk Retention Group (RRG) is specifically a liability insurance company that is formed and owned by its members, who are typically in similar business sectors or industries. The primary purpose of an RRG is to provide liability coverage to its members, which allows them to manage their own risks collectively. This structure allows members to pool resources to obtain insurance coverage tailored to their specific needs, often resulting in more favorable rates and terms compared to conventional insurance practices.

The formation of RRGs is enabled by the Risk Retention Act of 1986, which provides regulatory guidelines applicable to these groups. Members of an RRG share the risks and benefits among themselves, enhancing their control over their insurance solutions while prioritizing the unique risks that their particular industry faces. This collaborative approach to risk management can be particularly advantageous for businesses in specialized fields lacking suitable coverage options from traditional insurers.