Recreation Risk Retention Group, Inc: A Guide to Self-Insurance for Recreational Sports

Recreation Risk Retention Group, Inc:
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Recreation Risk Retention Group, Inc (Recreation RRG) is a liability insurance company that provides coverage for  the recreational sporting sector

Recreation RRG is a form of self-insurance, where the insured owns and controls the insurance company.

In this article, we will explain what a risk retention group (RRG) is, how it differs from a captive insurance company

What does a risk retention group do?

A risk retention group (RRG) is a state-chartered insurance company that insures commercial businesses and government entities against liability risks

RRGs were created by the federal Liability Risk Retention Act (LRRA) in 1986, which allows businesses with  liability exposures to form their own insurance company

RRGs are mutual companies, meaning that they are owned by the members of the group.

All insureds of an RRG must be owners of the RRG, and all owners of the RRG must be insured

What are the benefits of RRG?

RRGs offer several advantages for their members, such as:

  • Lower insurance costs:

They can reduce the expenses of insurance premiums, commissions, taxes, and fees by eliminating the middlemen and retaining the underwriting profits

  • Tax advantages:

RRGs can benefit from tax deductions for the premiums paid to the RRG, as well as tax exemptions for the income earned by the RRG

  • Customized coverage:

They can tailor their policies to meet the specific needs and preferences of their members, as well as provide coverage for risks that are not available or affordable in the commercial insurance market

  • Loss control and risk management:

RRGs can implement effective loss prevention and risk mitigation strategies for their members, as well as provide access to reinsurance markets and other resources

  • Greater control and stability:

They can give their members more control over the claims handling and settlement process, as well as ensure a stable source of liability coverage for the long term9.

What is the difference between captive and RRG?

A captive insurance company is a similar concept to an RRG, but there are some key differences.

It is a subsidiary insurer that provides risk mitigation services for its parent company or related entities

A captive insurance company can insure any type of risk, not just liability, and can have a single owner or multiple owners.

It is subject to the insurance laws and regulations of the state where it is domiciled

A captive insurance company can also choose to use different accounting standards than an RRG

What are some examples of risk retention?

There are many examples of RRGs in various industries and sectors, such as:

  • Recreation RRG:

As mentioned earlier, Recreation RRG provides liability insurance for members of the recreational sporting sector,

Recreation RRG was formed in 2016 by the United States Hang Gliding and Paragliding Association (USHPA)

Recreation RRG is domiciled in Vermont and has filed for registrations in 25 states.

Housing Authority RRG provides liability insurance for public housing authorities and their affiliates

It was formed in 1987 by the National Association of Housing and Redevelopment Officials (NAHRO)

Housing Authority RRG is domiciled in Vermont and operates in 49 states and the District of Columbia

  • United Educators RRG:

United Educators RRG provides liability insurance for educational institutions, such as colleges, universities, schools, and museums.

It was formed in 1987 by a group of higher education leaders after the education sector experienced a surge in litigation and insurance costs.

United Educators RRG is domiciled in Vermont and serves more than 1,600 members in the United States and Canada.

Conclusion

Recreation Risk Retention Group, Inc. is a liability insurance company that provides coverage for members of the recreational sporting sector.

It is a form of self-insurance, where the insureds own and control the insurance company.

Recreation RRG is an example of a risk retention group (RRG), which is a state-chartered insurance company

RRGs offer several benefits for their members, such as lower insurance costs, tax advantages, customized coverage, loss control and risk management, and greater control and stability.

RRGs differ from captive insurance companies, which are wholly owned subsidiary insurers that provide risk mitigation services

Captive insurance companies can insure any type of risk, not just liability, and are subject to the insurance law of the state

There are many examples of RRGs in various industries and sectors, such as Recreation RRG, Housing Authority RRG, and United Educators RRG.

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