What is a Risk Retention Group?

A risk retention group is a type of insurance company that is formed by a group of individuals. The insured members of the company are also the stockholders in the company. This creates a different type of business arrangement in which the insured members have a large stake in the company. 


One of the big advantages of setting up an insurance company in this manner is that you do not have to abide by the same state filing and licensing rules that regular insurance companies do. This makes it a much more informal process and allows companies to focus on doing what they do best. Another advantage of getting involved in this type of insurance is that you will have protection against liability and litigation for you or your business.


One of the disadvantages of this type of group is that you cannot get any other type of coverage besides liability. The business also cannot go out and seek clients that are outside of the initial group. This does not provide the risk retention group with the ability to expand in the future. There is also no guaranty fund available for the members of the group.

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