Risk Retention Groups Saw Significant Premium Growth in 2020
August 17, 2021
Risk retention groups' (RRGs) premium volume increased significantly in 2020, according to the Risk Retention Reporter.
RRGs' gross premiums climbed to nearly $3.84 billion last year, a nearly 7.2 percent increase from 2019, when RRGs generated just over $3.58 billion in gross premiums.
Of the 15 domiciles with the highest RRG premium volume, Alabama had the biggest RRG premium volume increase, with gross premiums rising 64 percent to $17.7 million in 2020, up from $10.8 million in 2019, according to the Risk Retention Reporter.
Other domiciles with big increases in their RRGs' gross premiums include Kentucky, whose RRGs had $20 million in gross premiums in 2020, a 56.1 percent increase from $12.8 million in 2019; Tennessee with $65.8 million in 2020, up 38.5 percent from $47.5 million in 2019; and South Carolina with $205.2 million, up 36 percent from $150.9 million in 2019.
Domiciles with the highest RRG gross premium volume include Vermont with close to $2.39 billion in 2020, up from nearly $2.18 billion in 2019, and the District of Columbia with $483.4 million in 2020, up from $463.4 million in 2019.
As of July 2021, Vermont had the most operational RRGs—79, up from 78 a year earlier—followed by South Carolina with 39 RRGs, up from 32 a year earlier, and the District of Columbia with 30, up from 29 the prior year.
In all, there were 226 RRGs operating as of July 2021, up from 216 a year earlier.
RRGs were first authorized under legislation Congress passed in 1981. Under that law, RRGs only were permitted to write product liability and completed operations coverage for policyholder-owners. In 1986, Congress passed legislation allowing RRGs to write all commercial casualty coverages except workers compensation.
After meeting the licensing requirements of one state, a risk retention group can operate nationwide with minimal interference from nonchartering state regulators.
August 17, 2021