Businesses in the same industry sometimes prefer to insure one another. A risk retention group is a liability insurance company owned by its members, all of whom engage in similar activities, and formed under the federal Liability Risk Retention Act to provide group-owned coverage.

Members are both owners and insureds. The group can operate nationwide after meeting the licensing requirements of a single domicile state, subject to registration and compliance rules elsewhere. Coverage is limited to commercial liability; property and workers’ compensation generally fall outside the structure.

Risk retention groups give members more control over underwriting, claims, and rates than traditional insurers may offer. They also concentrate industry-specific risk, so capital adequacy and reinsurance remain important. Governance by the member-owners distinguishes them from ordinary stock or mutual companies.

• Liability insurer owned by its member-insureds
• Authorized under federal risk retention legislation
• Limited to commercial liability coverages
• Provides members greater control over terms