Softening Market Drives PG Formations

The soft market appears once again to be driving purchasinggroup growth, which is no surprise. Market cycles have shaped theexpansion and development of such facilities since passage of theLiability Risk Retention Act in 1986, with formations increasing insoft markets and declining in hard markets.

This is how it works: The Liability Risk Retention Act createdtwo entities to address the liability needs of commercialinsureds–purchasing groups and risk retention groups. Purchasinggroups are comprised of homogeneous insureds who buy liabilitycoverage from admitted insurers, surplus lines carriers or riskretention groups.

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