Risk Retention Group (RRG)
A risk retention group is a member-owned liability insurance company formed under the federal Liability Risk Retention Act that provides coverage exclusively to its members, who share a common business or profession.
Risk retention groups are an alternative insurance mechanism authorized by the federal Liability Risk Retention Act of 1986. An RRG is a liability insurance company owned by its policyholders, who must share a common business, trade, or profession. In the apartment industry, several RRGs have formed to provide general liability, professional liability, or employment practices liability coverage specifically to apartment owners and managers who pool their risks together.
The primary advantage of an RRG for apartment owners is access to stable, tailored coverage when the traditional market tightens. During hard market cycles, when standard carriers restrict capacity or exit the apartment segment, RRGs can continue to provide coverage because they are not dependent on external capital markets. Members also benefit from the group's collective loss experience: if the RRG's members maintain strong risk management practices and low claim frequency, the savings flow back to members through dividend distributions or reduced assessments.
However, RRGs carry important limitations. They are chartered and regulated in a single state (their domiciliary state) and may not be subject to the guaranty fund protections that exist for admitted carriers. If an RRG becomes insolvent, policyholders in states other than the domiciliary state may have no access to guaranty fund payments. Additionally, RRGs can only write liability coverage—they cannot provide property insurance, workers' compensation, or personal lines coverage. Apartment owners considering an RRG should evaluate the group's financial strength, capitalization, reinsurance program, and claims-paying history with the same rigor they would apply to any traditional carrier.