Risk Retention Groups Saw Steep Premium Growth through 3 Quarters

Risk retention groups (RRGs) reported sharp increases in premium volume for the third quarter of 2022, according to a new report.

The report by Demotech, Inc., found that RRGs reported nearly $4.2 billion in direct premium written through the third quarter of 2022, up 60 percent from the same period in 2021. In addition, net premium written through this year's third quarter was close to $2.4 billion, up 51.2 percent from the same period in 2021.

However, from the third quarter of 2021 to the third quarter of 2022, risk retention groups' cash and invested assets decreased 4.2 percent, while total admitted assets declined 2.3 percent, Demotech reported.

In all, "RRGs remain financially stable while providing specialized coverage to their insureds," the report said.

Risk retention groups are a specialized type of group captive that Congress authorized under legislation passed in 1981. Under that law, RRGs, which were allowed to operate in any state after meeting the licensing requirements of the state in which they were domiciled, could only write product liability coverages for their policyholder owners.

In 1986, federal lawmakers, responding to the steep rise in premiums in the traditional market, revamped the law to allow RRGs to write all casualty coverages, except workers compensation.

Currently, there are 240 RRGS, according to the Risk Retention Reporter, up from 236 RRGs about a year ago.