A specialized type of insurance company formed by members who share similar risks and create a cooperative to provide liability insurance coverage for themselves.

Liability Insurance:

Coverage that protects individuals or organizations from financial loss due to legal liabilities, such as bodily injury or property damage claims, which RRGs offer to their members.

Member-Owners:

Individuals or entities that belong to an RRG and collectively own and control the group, participating in the decision-making processes related to risk management and coverage.

Homogeneous Risk Pooling:

The principle that RRGs are formed by members with similar or related risks, allowing for a more focused and specialized approach to underwriting and risk management.

Captive Insurance Company:

An insurance company established by its owner(s) to provide coverage for specific risks, with RRGs functioning as a type of captive insurer.

Alternative Risk Transfer (ART):

Strategies beyond traditional insurance, including RRGs, where businesses or organizations retain or transfer their own risks in a customized and cooperative manner.

Underwriting Discipline:

The careful evaluation of risks by an RRG during the underwriting process, ensuring that members with similar risk profiles are included and that the group remains financially stable.

Domicile:

The jurisdiction or location where an RRG is chartered and licensed to operate, with each state in the U.S. having its own regulations regarding RRG formation.

Risk Retention Act (RRA):

Federal legislation passed in 1981 that enabled the formation of RRGs, allowing certain organizations to retain and self-insure their liability risks.

Claims Administration:

The management and processing of insurance claims, often handled by a third-party administrator on behalf of an RRG to ensure efficient and fair claims resolution.

Premiums:

Payments made by RRG members to fund the coverage and operational expenses of the group, typically determined based on the assessed risks of each member.

Risk Management Services:

Services provided by RRGs to help members identify, assess, and mitigate risks, promoting a proactive approach to managing potential liabilities.

Reinsurance:

The practice of transferring a portion of the risk assumed by an RRG to another insurer (reinsurer), helping to spread the risk and enhance financial stability.