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 commercial insuredspurchasing groups and risk retention groups. Purchasing groups arecomprised of homogeneous insureds who buy liability coverage fromadmitted insurers, surplus lines carriers or risk retentiongroups.
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