What was the primary purpose of creating Risk Retention Groups (RRGs) under the Product Liability Risk Retention Act of 1981?

The primary purpose of creating Risk Retention Groups (RRGs) under the Product Liability Risk Retention Act of 1981 was to address the unavailability of insurance for some businesses, particularly in industries that faced high product liability risks. Before the establishment of RRGs, many businesses struggled to obtain affordable liability insurance, resulting in a significant coverage gap for certain sectors. By allowing businesses with similar needs to come together to form RRGs, the legislation enabled these groups to collectively share and manage their risks, thereby increasing their access to insurance coverage.

This collaborative approach helped alleviate the challenges faced by businesses that were otherwise unable to secure necessary insurance on the commercial market. Importantly, RRGs operate based on the principle of self-insurance among members, which allows for more tailored and potentially lower-cost insurance solutions that meet the specific needs of the group's constituents.