What is a risk retention group (RRG)?

A risk retention group (RRG) is indeed a liability insurance company owned by its members. This structure allows a group of individuals or business entities with similar risks to pool their resources and share the financial burden of possible losses. Each member of the group pays premiums into the RRG, which in turn provides coverage that is specifically tailored to the needs of its members. This concept is particularly beneficial for industries or professions that may have difficulty obtaining traditional insurance due to the unique nature of their risks.

The cooperative ownership model empowers members not only to share risk but also to have an influential voice in how the RRG is managed and operated, often leading to more favorable terms and rates compared to standard market offerings.

In contrast, the other options describe different types of insurance entities or coverage types that do not encompass the unique characteristics of risk retention groups. For example, public insurance entities or individual policies serve different functions and do not share the cooperative and member-driven framework that defines RRGs.