NAIC RRG Flashcards
What is a risk retention group?
structure set up by group of companies to provide insurance to the group
business with similar insurance needs
all must be owners of the RRG and all must be insureds
mostly for medical malpractice insurance
How are RRGs formed?
-combination of federal and state laws, supported by the
Products Liability Risk Retention Act which supersedes any state laws on the matter
-1981, amended in 1986
-submit plan of operation to commissioner detailing coverage, limits, rates, classification system
Regulation of RRGs
-many use GAAP
-few (if any) are required to submit rate and form filings - rates are based on actuarial analysis of membership
-like captives, able to manuscript policies to suit needs of members
-no guaranty fund access
-only needs to be licensed in one state, only domiciliary state can regulate them (unlike captives)
Are RRGs subject to NAIC accreditation standards?
Yes, although modified, because they are treated like multi-state insurers
Are RRGs financially stable?
Yes, per Demotech (rating agency) report in 2018
-they even wrote $2B in premium that year!
What did the 1986 amendment to the LRRA do?
allowed RRG to cover all commercial liability exposures, not just products liability
What necessitated RRGs?
unaffordable / unavailable products liability coverage in the 1970s due to
questionable pricing / reserving
uncertain regulation / torts
unsafe products
What must the RRG do before offering insurance in any state?
submit a plan of operation or feasibility study to the insurance commissioner of the domiciliary state
The plan of operation or feasibility study shall include the coverages, deductibles, coverage limits, rates and rating classification systems for each line of commercial liability insurance the group intends to offer.
If the group intends to offer any additional kinds of commercial liability insurance, it must submit revisions to such plan or study to the domiciliary state.
What must the RRG submit to non-domiciliary states?
copy of financial statements that it submits to domiciliary state
