The Risk Retention Act

The Risk Retention Act, enacted in 1986, allows certain groups of businesses to form self-funded insurance companies, called risk retention groups (RRGs), to insure their own members' liabilities. This enables businesses sharing similar risks to pool resources, reduce insurance costs, and improve risk management collectively. RRGs are regulated primarily at the state level, providing a legal framework for these innovative risk-sharing arrangements while maintaining oversight to ensure financial stability. Essentially, the Act facilitates cooperative risk management among businesses while balancing regulation and flexibility.