A risk retention group (RRG) is a captive insurance company formed pursuant to the federal Liability Risk Retention Act. This article discusses some of the basics of RRGs, including differences between RRGs and other types of captives.
A panel discussion on corporate governance of Risk Retention Group (RRG) at the 2017 Captive Insurance Companies Association (CICA) Conference provided a useful way to categorize RRGs. RRGs can be divided into one of three categories based on whether there is a sponsor and, if so, the type of sponsor.
A reciprocal insurance company is an arrangement through which mutual promises of the participants are exchanged with respect to their insurance risks. While not a separately incorporated company, it is characterized as an insurance company for federal tax purposes.
As a member of the board of a captive insurance company, you have a responsibility to understand the key concepts that underpin how the captive performs. This second in a series of articles continues this educational process, focusing on the concept of loss development.