Capital Assurance Risk Retention Group: A Failed Insurance Venture in Tennessee

Capital Assurance Risk Retention Group (CARRG) was an insurance company that offered warranty and extended warranty contracts to consumers on new and used automobiles.

It was part of the Ultimate Warranty Corporation, a service contract provider that operated in several states, including Tennessee.

In this article, we will explore what CARRG was, how it operated, and why it failed.

Capital Assurance Risk Retention Group Inc. Phone Number and Address

If you want to contact CARRG for any reason, here are their phone number and address:

Phone Number: (843) 579-2123
Address: P.O Box 7, Greenville, SC 29401
However, you may not get any response from them, as they have been placed in receivership by the South Carolina Department of Insurance since 2007.

What Does a Risk Retention Group Do?

A risk retention group (RRG) is an insurance company owned and operated by its members, who share an everyday liability exposure.

An RRG can provide liability insurance coverage for any type of risk, except workers’ compensation, personal lines, and property damage.

The main purpose of an RRG is to reduce the cost and increase the availability of liability insurance for its members.

By forming an RRG, members can benefit from economies of scale, risk pooling, customized coverage, and greater control over claims management.

What is an example of a Risk Retention Group?

One example of a risk retention group is Trinity Risk Solutions (TRS), which provides liability insurance coverage to long-term care facilities in Tennessee and other states.

TRS is owned by its policyholders, who are mostly nursing homes and assisted living facilities.

It offers comprehensive coverage options, such as general liability, professional liability, medical payments, and umbrella/excess.

TRS is a reputable and stable RRG that has an A (Excellent) rating from AM Best as of June 16, 2023.

This rating indicates that TRS has an excellent ability to meet its ongoing insurance obligations.

Who are the Members of a Risk Retention Group?

The members of a risk retention group are usually businesses or individuals who belong to the same industry or profession and face similar liability risks.

For example, the members of TRS are long-term care facilities that need liability insurance coverage.

The members of an RRG have to meet certain eligibility criteria and pay a membership fee to join the group.

The members also have to contribute capital to fund the group’s operations and claims reserves.

Members have voting rights and can elect the board of directors and officers of the group.

The members of an RRG benefit from lower premiums, broader coverage, and better service than they would get from traditional insurance companies.

The members also share in the profits or losses of the group.

Are Risk Retention Groups Safe?

Risk-retention groups are not regulated by the state where they operate, but by the state where they are domiciled.

This means that they are not subject to the same solvency standards, consumer protection laws, or guaranty funds as traditional insurance companies.

This also means that if an RRG becomes insolvent or fails to pay claims, its policyholders may not have any recourse or compensation from the state.

Therefore, it is important for potential customers to do their due diligence before joining an RRG.

Some factors to consider are:

1. The financial strength and rating of the RRG
2. The reputation and experience of the RRG
3. The coverage options and exclusions of the RRG
4. The claims handling and customer service of the RRG
5. The membership requirements and obligations of the RRG

Capital Assurance Risk Retention Group

CARRG was an RRG that provided warranty and extended warranty contracts to consumers on new and used automobiles.

It was part of the Ultimate Warranty Corporation, a service contract provider that operated in several states, including Tennessee.

CARRG was placed in receivership by the South Carolina Department of Insurance in 2007 because its financial condition was impacted by the failure of Ultimate Warranty Corporation.

The receivership order directed the Receiver to take control of the affairs of CARRG and to pay the claims against its estate over the next ten years until the expiration of the last underlying warranty contract.

However, CARRG’s policyholders faced many difficulties in getting their claims paid or their contracts honored.

Some of them had to sue CARRG or Ultimate Warranty Corporation to recover their losses.

Some of them had to rely on other insurers or service contract providers that insured or administered their contracts.

CARRG’s failure was a result of poor management, inadequate capitalization, and fraudulent practices by Ultimate Warranty Corporation and its affiliates.

CARRG’s failure also exposed the risks and limitations of RRGs as alternative insurance mechanisms.

Conclusion

Capital Assurance Risk Retention Group was an insurance company that offered warranty and extended warranty contracts to consumers on new and used automobiles.

It was part of the Ultimate Warranty Corporation, a service contract provider that operated in several states, including Tennessee.

It failed in 2007 and left its policyholders with unpaid claims and unfulfilled contracts.

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