When looking for appropriate insurance coverage for your business or organization, you may find that there are far more options than you imagined. One option, risk retention groups, can be appealing to those looking for controlled liability coverage.
What Is a Risk Retention Group?
An RRG (risk retention group) is a liability-based insurance company or organization governed by and covering only its members. These members, which consist of other businesses, must all have a vested interest in the group. Though RRGs must be formed under a single given state, they are able to operate in other states following a simple registration process.
What Are the Advantages of RRGs?
Though RRGs still carry risk, they also offer a number of notable advantages. These benefits include:
- Lower, fixed premiums
- Individualized policies
- Cross-state registration and licensure
- Internal control
RRGs are also advantageous due to the fact that members have access to re-insurance and keep all generated funds instead of paying off an insurance company.
How Does an RRG Differ From Other Captives?
Perhaps the most striking difference between an RRG and a more traditional captive is that an RRG is owned by its own members rather than by several different stakeholders. This decreases the risk of catching the eye of the IRS, who is more likely to suspect captives of risky or inappropriate behavior.
If you’re in the market for liability-only insurance, risk retention groups offer protection, customization, and control without the overhead of typical insurance companies, making them an attractive option to many who prefer to remain in charge of their own assets.