Glossary

Risk purchasing group

A group of businesses with similar liability exposures that buys liability insurance together under federal law, without forming its own insurer.

Also called: RPG, purchasing group, group purchase of liability insurance

A risk purchasing group is a set of businesses or professionals with similar or related liability exposures that organizes to buy liability insurance collectively, hoping for better price, terms or availability than each member would find alone. The Liability Risk Retention Act of 1986 (15 U.S.C. 3901 and following) gives it legal footing. Unlike a risk retention group, a purchasing group is not an insurer and takes no risk. It is a buying club that places coverage with an admitted or surplus lines carrier, usually through a broker.

The Act overrides state laws that would bar such a group from forming, forbid group purchasing, or discriminate against its members. States keep the right to license the agents and brokers who place the coverage, and a group must notify the regulator in each state where it operates. The Act covers liability lines. Workers' compensation and personal liability sit outside the definition.

Say a trade association of 200 small child-care centers sets up a purchasing group and negotiates a general liability program with one insurer. Members get a single set of terms and the insurer gets a larger, more homogeneous book.

The pitfalls are shared pricing and protection. One member's bad claims can push up the group's renewal, and a policy from a non-admitted insurer carries no state guaranty fund backing. Check the insurer's financial strength. The guide on Risk purchasing groups (RPGs): how group liability buying works covers formation and registration.

Last reviewed October 10, 2026

In the index now

Related terms

Risk retention group A member-owned liability insurer formed under the federal Liability Risk Retention Act, licensed in one state but allowed to cover members in every state. Captive insurance company A licensed insurer owned by the business or group it insures, formed to underwrite their own risks rather than buying all coverage from outside insurers. Surplus lines broker A specially licensed broker who places coverage with non-admitted insurers after the admitted market has declined, and handles the required filings and taxes. Excess and surplus lines Insurance placed with non-admitted insurers for risks the standard market declines or cannot price, with freer forms and rates but less regulatory protection. Admitted insurer An insurance company licensed by a state's insurance department to sell policies there, subject to that state's filing rules and guaranty fund protection.

Related guides

Program business: niche insurance through program administrators How program insurance works: administrators, issuing carriers and reinsurers, what NAIC Model 225 requires, 2026 market size data, and what buyers should check. Risk purchasing groups (RPGs): how group liability buying works A risk purchasing group lets businesses with similar liability exposures buy together under federal law. How it works, state registration and its limits. Risk retention groups (RRGs): how they work and what to check A risk retention group is a member-owned liability insurer formed under a 1986 federal law. How it works, what it can write, and the guaranty fund gap to weigh.