Annual gross written premium generated by risk retention groups formed to provide a range of liability coverages for insureds engaged in the health care industry has more than tripled in five years--from $403.6 million in 2001 to $1.273 billion in 2005.
The subarea among health care RRGs showing the greatest premium growth is nursing homes, where premium has soared by a factor of almost nine since 2003--from $10.1 million to $86.9 million.
Although no RRGs had formed in this business area prior to 2002, more than 20 have formed since 2003. This is in response to hard-market conditions, in which traditional insurers raised rates for nursing home owners and operators to what buyers considered to be exorbitant levels.
The second-largest premium-generating subarea over the last five years was hospitals and affiliates, where premium has increased by a factor of almost four, growing from $220.4 million in 2001 to $831.6 million in 2005.
For physicians, which accounted for the largest number of RRG formations for the last three years, premium has grown by more than $100 million. The average RRG premium in this subarea of $6.4 million was almost twice that of the average premium of $3.3 million for nursing homes.
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