Risk Retention Groups RRG

In response to a hard insurance market in the mid 1908's, Congress passed the Liability Risk Retention Act of 1986. The legislation was intended to simplify the regulatory process for affinity groups such as doctors, real estate developers etc, who wanted to find an alternative to the and unavailability high cost of certain types of insurance coverage. The Act created two new legal statuses: Risk Purchasing Groups and Risk Retention Groups.

Risk Purchasing Groups are simply groups (individuals or companies) that want to join together to buy insurance at group rates. The Act prohibits states from placing certain restriction on these groups.

Risk Retention Groups (RRG) are insurance companies formed by an affinity group that enjoy an important regulatory status. Basically, the Act allows an affinity group to form an insurance company is one state (a sort of "home domicile") and be automatically qualified to do business in the other 49 states.

In theory an RRG only has to file with the states outside its home domicile:

* a plan of operation or a feasibility study which includes the coverage, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer, and;

* a copy of the group's annual audited financial statement submitted to the State in which the group is chartered, and;

* a reserve statement prepared by a qualified actuary.

In practice, state bureaucrats have proven very difficult to subordinate. There have been numerous suits against various states that have thrown up impediments that seem at odds with the Act.

Wayne Walker
Principal, Windward Harbor LLC
© Windward Harbor LLC 2004
http://www.windwardharbor.com

MORE RESOURCES:

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table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/1-0fd=Rurl=http://newsblogs.chicagotribune.com/triage/2008/12/health-insuranc.htmlcid=1276133500ei=Xas0SZ-wPIGi9gSy9N0nusg=AFQjCNF_2EMbw2O4kzncL6H238WleH35WgHealth binsurance/b sticker shock hits consumers/abrfont size=-1font color=#6f6f6fChicago Tribune,nbsp;United Statesnbsp;-/font nobr8 hours ago/nobr/fontbrfont size=-1Health binsurance/b sticker shock overcame Mickey Trznadel when he opened an envelope from Blue Cross and Blue Shield of Illinois earlier this year, b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/1-1fd=Rurl=http://www.marketwatch.com/news/story/Blue-Cross-Blue-Shield-Michigan/story.aspx%3Fguid%3D%257B5379FA18-BBBE-4084-A40A-AB5CFFB0BDAD%257Dcid=1276133500ei=Xas0SZ-wPIGi9gSy9N0nusg=AFQjCNE6YLTOKAjkZqubTaSdAQgEotIIWgBlue Cross Blue Shield of Michigan Answers Attorney General/a font size=-1 color=#6f6f6fnobrMarketWatch/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/1-2fd=Rurl=http://www.mlive.com/annarbornews/news/index.ssf/2008/12/blues_michigan_ag_continue_hea.htmlcid=1276133500ei=Xas0SZ-wPIGi9gSy9N0nusg=AFQjCNHGpm91E4V-6mZPh0SAEqTYNW-voABlues, Michigan AG continue health binsurance/b fight/a font size=-1 color=#6f6f6fnobrMLive.com/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/1-3fd=Rurl=http://www.mlive.com/kzgazette/news/index.ssf/2008/12/blue_cross_blue_shield_of_mich.htmlcid=1276133500ei=Xas0SZ-wPIGi9gSy9N0nusg=AFQjCNGeAoFQieXIlKbl_ClW8zPQwsydBwBlue Cross Blue Shield of Michigan continues push for health b.../b/a font size=-1 color=#6f6f6fnobrKalamazoo Gazette - MLive.com/nobr/font/fontbrfont size=-1 class=pa href=http://news.google.com/news/url?sa=Tct=us/1-4fd=Rurl=http://www.freep.com/article/20081201/FEATURES08/81201068cid=1276133500ei=Xas0SZ-wPIGi9gSy9N0nusg=AFQjCNE8Kq_KP76-p4OnHr9PatpFwcxrqwnobrDetroit Free Press/nobr/anbsp;- a href=http://news.google.com/news/url?sa=Tct=us/1-5fd=Rurl=http://www.crainsdetroit.com/article/20081201/FREE/812010270/-1cid=1276133500ei=Xas0SZ-wPIGi9gSy9N0nusg=AFQjCNGxK50mQcZNthzphuG3fRbnkLFONwnobrCrain's Detroit Business/nobr/a/fontbr/font class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1276133500hl=ennobrall 23 news articles/nobr/a/font/div/font/td/tr/table

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