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ILLINOIS CAPTIVE & ALTERNATIVE RISK FUNDING INSURANCE ASSOCIATION

Purchasing Groups

Definition

Risk Purchasing Groups (PGs or RPGs) are groups of policyholders with similar risks who may group together to purchase liability insurance authorized by the Federal Liability Risk Retention Act of 1986. Authorization under the federal statute allows a group to be incorporated in one state, but to purchase insurance in all states, subject to specific and limited restrictions. The Federal Act preempts state law in many ways.

Advantages:

• Can use custom-made forms and pricing.
• Control over risk-management concerns.
• No capitalization requirement.
• Group business more attractive to underwriter.

Disadvantages:

• Must register in all states where PG members reside.
• Risks are limited to liability insurance.
• May not be able to comply with proof of financial responsibility laws.

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2003 Contact Information:

Chad Kunkel
Gallagher Captive Services, Inc.
Two Pierce Place
Itasca, IL 60143
630-285-4176
630-285-4000 (fax)
chad_kunkel@ajg.com