RRGs At Sea With In-House D&O, E&O Risks
Hardening traditional market sparks interest in new options among RRG leaders
A survey of risk retention groups found that 48 percent of respondents expressed interest in becoming members of an RRG or captive to cover their directors and officers and errors and omissions exposures, should such an entity be formed.
The study, conducted by the Risk Retention Reporter, found that several CEOs of existing RRGs, frustrated with rising premiums and dwindling coverage as traditional D&O and E&O insurance carriers mandate more and more exclusions, are attempting to determine whether other RRGs have interest in forming a new captive or RRG to insure the D&O and E&O liability exposures of their own RRGs.
Exposures of RRG board members are covered by D&O insurance, while exposures of RRG insurance operations are covered by E&O insurance.
The survey found that the strongest interest in participating in the formation of a D&O/E&O captive or RRG came from those RRGs already buying such coverage in the traditional marketplace, although some interest was also expressed by RRGs that did not carry either D&O or E&O coverage.
Of the 26 RRG respondents having D&O and/or E&O coverage, 16 expressed interest in participating in the formation of a captive or RRG, and five RRGs without the coverage also expressed interest, for a total of 21 RRGs out of the 44 respondents.
Of the 21 RRGs interested, 19 said they would be willing to contribute capital to a new entity to insure these risks, while two RRGs said they would not be willing to contribute. The accompanying table summarizes the survey results.
Karen Cutts is editor and publisher of the "Risk Retention Reporter" in Pasadena, Calif. Visit www.rrr.com for information on risk retention groups and purchasing groups.
Hardening traditional market sparks interest in new options among RRG leaders
A survey of risk retention groups found that 48 percent of respondents expressed interest in becoming members of an RRG or captive to cover their directors and officers and errors and omissions exposures, should such an entity be formed.
The study, conducted by the Risk Retention Reporter, found that several CEOs of existing RRGs, frustrated with rising premiums and dwindling coverage as traditional D&O and E&O insurance carriers mandate more and more exclusions, are attempting to determine whether other RRGs have interest in forming a new captive or RRG to insure the D&O and E&O liability exposures of their own RRGs.
Exposures of RRG board members are covered by D&O insurance, while exposures of RRG insurance operations are covered by E&O insurance.
The survey found that the strongest interest in participating in the formation of a D&O/E&O captive or RRG came from those RRGs already buying such coverage in the traditional marketplace, although some interest was also expressed by RRGs that did not carry either D&O or E&O coverage.
Of the 26 RRG respondents having D&O and/or E&O coverage, 16 expressed interest in participating in the formation of a captive or RRG, and five RRGs without the coverage also expressed interest, for a total of 21 RRGs out of the 44 respondents.
Of the 21 RRGs interested, 19 said they would be willing to contribute capital to a new entity to insure these risks, while two RRGs said they would not be willing to contribute. The accompanying table summarizes the survey results.
Karen Cutts is editor and publisher of the "Risk Retention Reporter" in Pasadena, Calif. Visit www.rrr.com for information on risk retention groups and purchasing groups.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 3, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
