Why a risk retention group could benefit your business.
Business owners have many options when it comes to protecting against liability risks. Relatively recently, Congress passed legislation that allowed for the creation of a new insurance category known as risk retention groups. Curious to learn more about this coverage option? Here’s how a risk retention group could benefit your business.
What is a Risk Retention Group?
A risk retention group is a form of self-insurance plan that helps to minimize risk by distributing a single company’s liability risks to all members in the group. Insurance premiums are also distributed among the members of the group, ensuring that coverage costs stay affordable despite potential risks.
How Do You Form a Risk Retention Group?
To create a risk retention group, members must share similar liability risk. This means that group members are typically involved in the same types of business and activities. To officially form a risk retention group, the group only needs to meet the insurance licensing requirements of a single U.S. state before operating nationwide.
What are the Benefits of a Risk Retention Group?
There are many benefits associated with establishing or joining a risk retention group. For starters, group members are able to secure comprehensive liability insurance at rates that are far lower than the prices in standard commercial insurance markets. Other advantages include the following:
- Exemption from state laws– Because risk retention groups only need to meet the insurance regulations of one U.S. state, they are exempt from the insurance laws that other states have in place.
- Improved loss control– Because members of the group own the insurance policies, they are more proactive about implementing risk management strategies to reduce losses and keep their premiums down.
- Increased coverage options– Individually, group members would be forced to secure many different policies to meet their specific needs. However, because group members share similar risks and business operations, they can customize their insurance in ways that the traditional insurance market cannot.
This is how joining a risk retention group could benefit your business. Are you looking for assistance with your business’s commercial coverage? If so, then contact the experts at PMC Insurance Group. Our dedicated team is eager to assist you with all your small business insurance needs today.