Rethinking Liability Coverage: Is a Risk Retention Group Right for You?

Traditional insurers usually meet most liability coverage needs—but not always. In industries hit hard by rising costs, like those facing cyber threats or harassment claims, insurance can be overpriced or unavailable. That’s where risk retention groups (RRGs) come in.

RRGs are insurance alternatives formed by businesses to insure themselves. Owned by their policyholders, these groups offer more control over premiums and risk management. However, they're lightly regulated compared to standard insurers, which brings both opportunity and risk.

What Are RRGs?

Originally limited to product liability, RRGs gained broader power with the Liability Risk Retention Act of 1986. This federal law allows them to provide commercial liability coverage across all 50 states after licensing in just one “domicile” state.

All members of an RRG must be from similar industries and share comparable risks. Popular among high-risk professions like healthcare, RRGs allow businesses to collaborate on coverage solutions tailored to their specific exposures.

PROS AND CONS

Benefits:

• Customized policies that fit your business
• Often lower premiums due to regulatory exemptions
• Multi-state operations simplified under one license
• Members share in profits, not insurers

Drawbacks:

• No property coverage—liability only
• All funds must come from members, increasing financial exposure
• Insolvency risks could affect all members
• Limited oversight outside the home state

Key Considerations

Joining an RRG means shared responsibility. Make sure you trust the other members, understand your financial obligations, and weigh the risks before committing.

Need help evaluating your options? Contact Concierge Insurance Group for personalized guidance on your liability coverage.