What do members of a risk retention group share?

Members of a risk retention group share similar liability risks due to their industry, which is the fundamental concept behind the establishment of such groups. Risk retention groups are formed primarily to allow members with similar exposure to risks to pool their resources and cover liabilities that they face in their specific industries. This collaborative approach helps to manage and mitigate the financial burden of liability claims when they arise.

By sharing their liabilities, members can take advantage of bulk purchasing power when it comes to liability insurance, often leading to lower premium costs than they might achieve individually. This arrangement provides a means for policyholders to have more control over their risk management and insurance arrangements, as the group is often tailored specifically to their shared industry challenges and circumstances.

While sharing personal insurance needs and pooling assets can be components of various types of insurance arrangements, they do not directly capture the distinctive purpose of a risk retention group, which focuses on mutual benefit through shared liability exposure.