Risk Retention Group Growth RateAccelerates

Annual RRG premiums soared 37.4 percent in 2003 to$1.737 billion

While annual premiums for risk retention groups have increasedalmost every year since passage of the Liability Risk Retention Actin 1986, the growth rate has escalated as RRGs continue to form inunprecedented numbers.

Annual premiums for risk retention groups in 2003 totaled $1.737billionan increase of 37.4 percent over 2002s figure of $1.265billion. Three RRGs wrote over $100 million, 11 wrote from $30million to $100 million, and 18 wrote between $10 million and $30million.

The June issue of the Risk Retention Reporter, in fact,notes eight new RRGs, bringing the total to an all-time high of161.

Attorneys' Liability Assurance Society Inc. remains the largestpremium-generating RRG of the 151 operational entities listed inthe “Risk Retention Group Directory & Guide, 2004,” with 2003annual gross premium of $308.3 million, compared with $264.3million in 2002 and $191.6 million in 2001.

MCIC Vermont Inc. again came in second with $248.5 million,compared with $162.3 million in 2002 and $67.6 million in 2001.United Educators Insurance (a reciprocal RRG) was third, writing$120 million in annual premium in 2003 compared with $90.1 millionin 2002 and $63.7 million in 2001.

Mountain Laurel RRG Inc. (formerly JHS, A Risk Retention GroupInc.)a Vermont-domiciled RRG insuring hospitals and health caresystems that began operating in 2003came in as the fourth-largestpremium producer, with 2003 premium of $78.7 million.

Other RRGs that showed significant premium gains wereProBuilders Specialty Insurance Co. RRG (formerly Builders &Contractors Insurance Company RRG), which almost tripled its 2003premiumto $35.5 million from $12.2 million in 2002, and NationalHome Insurance Company, an RRG whose premium rose almost 45 percentin 2003 to $27.9 million from $19.3 million in 2002.

For the first time, RRGs providing liability coverages forcontractors and homebuilders were among the top premium producingfacilities. Another RRG showing significant gains was OphthalmicMutual Insurance Company RRG, whose premium rose 37 percent in 2003to $38.0 million from $27.7 million in 2002.

Only a few RRGs showed premium declines, including CommunityHospital Alternative for Risk Transfer, a reciprocal whose 2003premium declined to $24.5 million from $29.2 million in 2002, andWestern Pacific Mutual Insurance Company, an RRG whose 2003 premiumdeclined to $7.5 million from $8.9 million in 2002.

Even with the loss of two RRGs which generated more than $100million in 2002 annual premiumNational Warranty Insurance RiskRetention Group (which was declared insolvent) and PodiatryInsurance Company of America (RRG), A Mutual Co., (whichreorganized as a domestic insurer)total 2003 RRG premiums exceededthe Risk Retention Reporters annual survey estimate of$1.725 billion.

Karen Cutts is managing editor and publisher of the “RiskRetention Reporter,” a monthly newsletter based in Pasadena,Calif., that she founded shortly after passage of the 1986Liability Risk Retention Act.

Reproduced from National Underwriter Edition, June 4, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.