What is required for members of a risk retention group?

Members of a risk retention group are required to engage in similar or related businesses. This requirement is essential because risk retention groups are formed to provide liability insurance to their members, who share similar exposure to risk within their industry or business operations. By being in related businesses, members can pool their resources and risks more effectively, leading to more tailored coverage that meets their specific needs.

This structure allows risk retention groups to operate and provide insurance solutions that would otherwise be hard to find in the traditional insurance market, especially for industries facing unique liability challenges. Engaging in similar or related businesses ensures that the group's underwriting and loss experiences are aligned, which is critical for maintaining the financial stability of the group and ensuring premium rates are fair and adequate for all members involved.