Risk Retention Group

Liability insurance companies owned by their policyholders. Membership is limited to people in the same business or activity, which exposes them to similar liability risks. 

These entities are formed under the Liability Risk Retention Act of 1986. Under law, risk retention groups are not allowed to  write certain types of coverage, most notably property lines and workers' compensation. They can write general liability and excess liability coverage as well as other types of coverage.

If one signs up with a RRG he is required to sign a membership agreement that includes investment in the group itself as these groups are funded by their members.

In the construction industry all of the RRG policies that we have seen through our agency have been manuscript forms. None have used standard ISO forms. RRGs became widely available during the hard market that began around 2002. During this time pricing was a very big issue and the lower cost of RRG prompted several groups to form. None of the RRGs offered to the construction industry have received a rating from AM Best as of June 2007. 

In the current market there are plenty of rated insurance carriers offering competitive rates to contractors.