Insurance companies that come together to form an organization of self-insurers that’s chartered and licensed in at least one state to sell liability insurance.
Risk retention groups are owner controlled and allow members to write liability insurance for any or all insurance types, excluding first party coverage such as property, workers compensation and personal lines of insurance.
Advantages:
- Avoidance of multiple state filing and licensing requirements
- Member control of risk and litigation management
- Elimination of market residuals
- Establishment of stable coverage and rate market
- No fronting-fee expense
- Exemption from countersignature laws
Disadvantages:
- Risks limited to liability insurance
- No writing outside business
- No guarantee fund available for members
- Difficulty in complying with proof of financial responsibility laws