Why Agents Should Love Risk Retention Groups
Don’t be a “Jack of all trades, master of none”! Specialty coverage programs are the rave in the insurance industry and with good reason. When a person or organization specializes in a product or service, it’s a clear statement that they have mastered that genre. One can’t call themselves a specialist without having dug way into the crooks of understanding a matter and almost perfecting delivery of it. Insurance carriers invest extensive resources learning about the risks of various niche industries. Most popular among them are, healthcare, education, churches, contractor, manufacturing etc. Knowing the unique risks associated with operations in an industry give carriers the advantage of creating insurance products that meet their specific needs.
Many retail insurance agents have followed in the footsteps of carriers and become highly specialized as well. That may be a default or intentional strategy. In either event, market specialization has just as many benefits for the retailer of insurance as it does the carrier. The goal of a retail agent is to not only find the best coverage, but cost effective, comprehensive coverage. Agents want to be your “one stop shop”. With that said, it’s imperative that they partner with the right carriers. When dealing with a highly specialized industry, there can be instances where product availability is scarce and/or expensive.
Risk Retention Groups (RRGs) are formed by industry leaders, who fund their own insurance company and offer coverage to other professionals in their market. They were created primarily to address a lack of liability coverage (general, products, benefits) and affordability issues that many industries face. An RRG is a specialty insurance carrier. Unlike standard carriers who control the handling of claims and litigation, RRGs owners have complete control. They understand, operate and have firsthand insight of risk management needs.
RRGs do not have to be licensed and filed in every state they do business. They can also offer a stable market for coverage and rates, unlike standard carriers that often change their coverage offerings or discontinue them all together. This leaves agents scrambling to find replacement coverage for their insureds. As an agent, countersignatures are not needed. This adds to the ease of doing business. Coverage offerings are combinable and complimentary to other lines of business offered by standard carriers. This gives agents flexibility in meeting their clients’ needs. An agent that’s not partnering with an RRG may be leaving a gap in service that could have a significant impact on their clients’ cost savings. Specialty coverage programs do not get any better than that which is offered and owned by the professionals themselves!