Glossary
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.
Also called: RRG, liability risk retention group, risk retention group insurer
A risk retention group is a liability insurance company owned by its policyholders, who must be engaged in similar or related businesses and face similar liability exposures. The Liability Risk Retention Act of 1986 lets an RRG be chartered and licensed in one state, its domicile, and then operate in every other state by registering there rather than getting separate licenses. The domicile state is the primary regulator, and other states' power over the group is largely preempted.
The Act covers commercial liability: medical professional liability for physicians, contractors' general liability, products liability and the like. Workers' compensation, property and personal lines are outside it. Members contribute capital, share underwriting results, and have a vote in how the group is run. Many RRGs grew up where commercial insurers pulled back, and they tend to be specialists in one industry.
The caution is protection. An RRG policy must carry a notice that the group may not be subject to all of the insurance laws of the policyholder's state, and state guaranty funds do not cover it. If the group fails, unpaid claims may fall on the members. Check capital, reinsurance, claims history and AM Best rating if any, and confirm that a lender or contract counterparty accepts RRG paper, because some require an admitted insurer.
The guide on Risk retention groups (RRGs): how they work and what to check covers joining one. See risk purchasing group for the buying alternative and captive insurance company for the wider family.
Last reviewed October 10, 2026