Risk Retention Group

C

A risk retention group (RRG) is an insurance entity formed by members of a particular industry, trade or profession for the primary purpose of assuming and spreading liability risks among themselves.

RRGs are typically formed under the Liability Risk Retention Act of 1986 (LRRA), which allows members of a similar business or profession to band together to form an insurance company to provide liability insurance coverage.

RRGs are owned by their members and are regulated by the state in which they are domiciled, but they are also subject to federal securities laws and regulations.

The primary purpose of forming an RRG is to obtain liability insurance coverage at a lower cost than could be obtained from traditional insurance companies. Members of an RRG pool their resources to cover the risks of the group, and premiums paid by members are used to pay claims and administrative expenses.

Option A, which mentions a "public entity formed by the members of the public pool primarily to provide business risk competency to the members," does not accurately describe an RRG.

Option B, which mentions a "business entity formed by the members of the private pool primarily to provide commercial asset insurance to the members," also does not accurately describe an RRG.

Option D, which mentions an "insurance entity formed by the members of the public pool primarily to provide commercial expense insurance to the members," is incorrect as well.

Option C, which mentions an "insurance entity formed by the members of the private pool primarily to provide commercial liability insurance to the members," is the correct answer.