Risk Retention Groups and Trade/Professional Associations (The new power couple)!
Raise your hands if you enjoy being rewarded for doing something you must do anyway! Risk Retention Groups (RRGs) were formed out of the need for liability coverage at affordable premiums. This problem remains prevalent in industries like healthcare, hospitality, educational institutions, churches etc. These industries often have national and/or state level associations where professional members congregate to advance their knowledge, skills and abilities. It’s also a great opportunity for participants to network and partner in their operations and services. An integral part of this networking includes ways and means to do business better.
RRGs are formed by leading industry participants, often members of trade or professional associations, who fund their own insurance company and offer coverage to the other businesses in their market. They have a vested interest in the quality and breath of the product, claims and risk management as well as cost. RRGs have freedom to offer coverage across state lines without licensing requirements. Agents are not bound to countersignature laws that require multiple signatures to bind business. An attractive feature of RRGs is; unlike traditional insurance carriers, owners of an RRG can retain their underwriting profits through good risk management practices and keeping claims severity and frequency low.
A perfect example of this “coupling” of a trade association and an RRG is, the North Carolina Association of Long Term Care Facilities (NCALTCF) and National Assisted Living Risk Retention Group (NALRRG). Key members of NCALTCF came together to start NALRRG in 2003, to provide General and Professional Liability insurance to Assisted Living Facilities, Adult Group Homes and Personal Care Homes. They currently write business in 11 states and counting, offer competitive coverage, pricing and are a great alternative to the residual markets. NALRRG insured businesses in all states enjoy automatic membership in NCALTCF with the purchase of their policy. This gives them full access to all the association’s professional development products and services.
Most skilled professions are required by law to carry General and Professional Liability coverage. Creating or partnering in a relationship with a Risk Retention Group allows professional associations to carve coverage that is specific to their industry needs. More importantly, it allows associations to take control of the insuring process and profits. It’s like using your reward credit card to pay for your bills. You have to pay those bills anyway, why not benefit from it?!