May 31, 2004 by Canadian Underwriter
Risk retention groups (RRGs) are on the upswing, according to data compiled by the U.S.-based Risk Retention Reporter.
In 2003, RRG premiums rose to US$1.73 billion dollars, up from US$1.27 billion in 2002. In the last 17 years, RRG premiums have risen more than US$1.5 billion.
And the number of RRGs jumped in 2003, to more than 140. This is well above 2002, which held the previous 17-year record at 90. In 1988, the number stood at just 54.
The number of insureds in RRGs was 154,000, a slight increase over 2002, but a drop from the years 1999-2001 when insureds numbered in the 170,000 range. Nonetheless, the long-term trend is an increase, with 1990-1995 seeing insureds number well below 100,000.
The same is true for average premiums per RRG, which hit US$13.6 million in 2003, compared to US$5.2 million in 1988. Only 2001 posted a higher per-group average at US$13.7 million.
RRGs are liability insurance companies owned by their members, domiciled in a specific state but able to insure members in all states, the Risk Retention Reporter explains. This compares with purchasing groups, who do not retain risk, but transfer it to an insurer.
More information on the 2003 results can be found at www.rrr.com.