How a Risk Retention Group is Different Than a Captive

Risk Retention Group

It isn’t unusual for professionals in the dental, medical, and law industries to use risk intention groups or RRGs. An RRG is a liability insurance company owned by its members, and while RRGs are similar to captives, there are significant differences. Here are three things to know before you make any commitments or sign contracts regarding your insurance future.

Flexible Operations

One of the significant differences between RRG vs captive is operational flexibility. Unlike a typical captive, an RRG can function as a captive or a traditional insurance company conductin. Yet, only a few states choose to license a risk retention group under common coverage statutes.

Fewer Licensing Requirements

Of the nearly 7000 worldwide captives, only 250 of them are RRGS. However, because most of them are licensed in the US, they are only required to establish a domicile in one state, unlike a traditional captive. This allows a risk retention group to do business in states without additional licensing and can function by only completing the registration process.

Slower Growth

Since their establishment in 1981, captives have steadily grown despite economic fluctuations. Yet, things like rising premiums and dwindling coverage consistently influence RRGs.

While RRGs and captives are similar, there are differences, and they offer a unique insurance option to business owners. RRGs can help members manage costs and are a good bet for future liability protection in the future.