What's an RRG?

Short for Risk Retention Group, an RRG is basically an alternative to state-regulated insurance companies.  RRG's are typically formed by a group of private investors although this is not a requirement.  The investors fund the RRG with their own money and officially set up shop in their state of choice.  Once domiciled, the RRG can write business pretty much anywhere in the continental United States.

What's the advantages of an RRG?  Risk retention groups often boast cheap premiums to attract new business, appealing to policyholders who are most concerned with cost.  But be warned: coverage through an RRG can be extremely restrictive and poses some serious risks.

An RRG is not part of the state's Guaranty Fund so should they become insolvent, you would have no safety net to pick up your exposures.  RRGs also don't have to follow the same guidelines and requirements as an admitted company and they are not regulated by the Texas Department of Insurance.  In addition, your coverage can be extremely restrictive such as defense costs inside the limit of liability and as a policyholder, you are subject to an assessment if the RRG needs to replenish its surplus.

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