What distinguishes Risk Retention Groups (RRGs) from other insurance types?

Risk Retention Groups (RRGs) are specifically formed to provide commercial liability insurance to their members, who are typically involved in similar businesses or professions. This type of insurance organization allows businesses to pool their risks together, thereby reducing the overall cost of liability insurance through mutual risk sharing.

RRGs are defined and created under the Federal Liability Risk Retention Act of 1986, which allows them to operate across state lines. This federal backing is unique to RRGs and differentiates them from other types of insurance entities that may be limited by state-specific regulations. The primary focus on commercial liability insurance means that RRGs serve a specific niche within the larger insurance landscape, primarily catering to the needs of their member organizations.

This focus on commercial liability is a hallmark of RRGs, setting them apart from other types of insurance offerings or associations that may address different classes of insurance, such as life or health insurance. Thus, the distinction of RRGs as providers of commercial liability insurance is the defining factor in this context.