Introducing: The Purpose- Driven Risk Retention Group
An RRG isn’t just an alternative to traditional liability insurance —it’s a long-term partnership between businesses committed to protecting themselves and each other.
What is a Risk Retention Group and Why Are They Formed?
A Risk Retention Group (RRG) is a member-owned liability insurance company formed under the Liability Risk Retention Act of 1986 (LRRA). RRGs allow businesses or organizations facing similar risks to join together to insure against liability risks as an alternative to traditional insurance, which may not meet those businesses’ particular needs, be too costly, or be difficult to obtain. For many different business sectors including healthcare, government and institutions, property development, and more the risk retention group structure has provided a long-term insurance solution for its members.
Risk Retention Groups: Quick Business Facts
• There are RRGs in most business sectors and nearly 250 total Risk Retention Groups in operation nation-wide.
• Some RRGs operate like single-parent captives and others more like traditional carriers.
• RRGs can be organized as a stock, mutual, or reciprocal insurance company.
• Gross written premium ranges from less than $1 million to nearly $500 million.
What is a Purpose-Driven RRG and What Makes it Unique?
The nature of RRGs is inherently purpose-driven because RRGs are created to meet members’ unique or niche insurance needs. True purpose-driven RRGs are also built around shared member values, long-term commitment, and a focus on risk management – all to serve the interests of its policyholders.
Core Characteristics of a Purpose-Driven RRG:
Designed to Serve Members, Not Markets – Unlike traditional insurance companies, which seek to generate profits, purpose-driven RRGs are created for the benefit of their members—not shareholders or executives. Because RRGs are owned and operated by their members, RRGs are extremely knowledgeable about their risks. This allows them to tailor their policies and underwriting to the specific needs and risks of their members and satisfy the liability needs for a niche market. Some purpose-driven RRGs take this a step further, offering complimentary lines or value-add services to their offerings.
A Focus on Risk Management and Safety – Risk management and safety are key parts of underwriting in a purpose-driven RRG. Policyholders aren’t just buying coverage; they are investing in each other’s success by maintaining best practices and improving safety standards. Members must actively engage in risk reduction efforts, ensuring that the group remains financially strong and insurable. As such, a purpose-driven RRG has selective membership and may occasionally reject an insured to protect the company and other members.
A Shared, Long-Term Commitment – Unlike traditional insurers that may withdraw from a market during tough times, purpose-driven RRGs are designed to succeed over time when all of its members share a long-term commitment to risk management that can lead to consistent, stable coverage, and as best as possible, stable pricing.
Ultimately, purpose-driven RRGs not only share insurance, they share accountability with and commitments to one another. RRGs that are successful in this partnership can remain stable and continue to meet members’ needs over time, including during both soft and hard markets.
Business Sectors & Purpose-Driven RRGs
Because RRGs are structured to provide specialized coverage for business sectors with unique liability risks, they have been particularly beneficial in sectors where traditional insurance has failed to provide stable, affordable solutions.
RRGs have enabled these industries to:
Provide affordable and customized liability insurance
Encourage strong governance and operational risk management
Create a long-term, stable coverage solution that aligns with members’ missions
Environmental
Agriculture
Forest Management
Underground Tanks
Financial
Institutions
Brokers
Government & Institutions
Educational Institutions
Government Employees
Non-Profit Organizations
Public Entities
Religious Institutions
Healthcare
Nursing Homes
Dental
Health Maintenance Organizations
Hospitals
Alternative Healthcare Practitioners
Physicians
Manufacturing
Extended Service Contracts
Manufacturers
Distributors
Outdoor & Fitness
Sports
Recreational Activities
Professional Services
Architects and Engineers
Attorneys
Information Technology
Insurance Professionals
Property Development
Contractors
Builders
Real Estate
Transportation
Commercial Vehicles
Dealerships
Trucking
Is an RRG the Right Risk Management Solution for You?
If you are considering joining or starting a purpose-driven RRG, evaluate your reasons and values and whether they align with the discussed core characteristics of a purpose-driven RRG.
Be inquisitive and explore your interest from varied perspectives: your business needs, your members, premium vs. cost, capital commitment, and long-term commitment.
Here are some questions and steps to help determine if a Purpose-Driven RRG aligns with your needs:
1. Identify Your Insurance Challenges
Are you struggling with rising premiums, limited coverage options, or market instability?
Do traditional insurers view your industry as high-risk, leaving you with few affordable options?
Would your business benefit from an insurance model focused on proactive risk management?
2. Evaluate Your Commitment to Risk Management
Are you willing to implement required safety protocols and loss prevention strategies?
Would your company embrace a long-term partnership with other policyholders to maintain financial strength?
Can you commit to actively improving your risk profile over time?
3. Assess Financial & Operational Feasibility
Does your industry have enough businesses with similar risks to form a viable RRG?
Would your group’s premium volume be sufficient to offset claims and operational costs?
Do you have access to capital and risk management expertise to maintain financial stability?
4. Consult Industry Experts & Conduct a Feasibility Study
Speak with existing RRG owners to learn from their experiences.
Conduct a feasibility study to determine whether forming or joining an RRG is a good fit for you.
Conclusion
For certain businesses and organizations, traditional insurance falls short—leaving them with unstable pricing, limited coverage, or no options at all. Purpose-Driven RRGs provide an alternative solution built to satisfy unmet or niche insurance needs for businesses facing similar risks, built on a foundation of mutual commitment, proactive risk management, and financial sustainability.
Join NRRA to learn more about RRGs, connect with industry experts, and gain access to the NRRA RRG Toolkit.