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Delve into captive insurance governance matters including board attributes, board structure, and board accountability. With 30 years of insurance experience from the auditing, regulatory, and management side, Derick White, managing director of corporate governance and regulation for Strategic Risk Solutions, offers key insights into captive board governance.

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"2018 Risk Retention Group Benchmarking Study" Provides Valuable Insights

Actuarial Report-SF2
January 18, 2019

The 2018 Risk Retention Group (RRG) Benchmarking Study from Pinnacle Actuarial Resources, Inc., is now available. The study provides an in-depth look at RRG financial statement data, complete with trends and comparisons to the admitted market. Pinnacle examines a wide variety of metrics, including the number of RRGs, capitalization, premiums, loss and loss adjustment expenses, loss development patterns, underwriting expenses, underwriting and investment income, and operating ratios.

According to Pinnacle, one of the study's key elements is a review of RRGs by industry segment—other liability, commercial auto liability, and medical professional liability. This allows for more in-depth analysis of metrics such as premium risk state, combined operating ratios, and subsequent loss reserve development.

Pinnacle Principal Rob Walling said, "The RRG Benchmarking Study provides valuable insights into the RRG market. This research is especially important due to the recent poor results RRGs have experienced in commercial auto, the tightening market for nursing home and senior care liability coverage, and changes in the control of medical professional liability RRGs. The study also showcases Pinnacle's expertise in developing insightful benchmarks using annual statement data."

 Some of the report's more interesting findings include the following.

  • Annual RRG premium volume has increased significantly in recent years, totaling more than $3 billion in 2017, up from just over $2.5 billion in 2014.
  • Of the 226 RRGs identified in an A.M. Best Co. database for 2017, nearly two-thirds were domiciled in 3 states: Vermont, where 37 percent of RRGs were domiciled; South Carolina, where 15 percent of RRGs were domiciled; and Washington, DC, where 13 percent of RRGs were domiciled.
  • Medical professional liability (MLP), was, by far, the biggest line of coverage written by RRGs. The nearly $1.8 billion of MPL premium volume in 2017 was roughly 60 percent of RRGs' total premium volume.

The 2018 Risk Retention Group Benchmarking Study is available for download.

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