Which act authorized the formation of risk retention groups?

The Federal Risk Retention Act of 1986 is the correct answer because it specifically authorized the formation of risk retention groups (RRGs) in the United States. These groups are formed to provide liability insurance for their members, who share similar risks, often within the same industry or profession. The Act aims to increase the availability of liability coverage by allowing groups to self-insure and pool resources.

By establishing the legal framework for RRGs, the Federal Risk Retention Act facilitates the creation of insurance programs that are tailored to the unique needs of members, thereby enhancing competition in the insurance market. It also outlines the regulatory structure governing these groups, ensuring they operate under consistent federal standards.

Other options refer to legislation that does not specifically address the establishment of risk retention groups as the Federal Risk Retention Act of 1986 does.