RRGs In The Market For Captive Managers
Risk retention groups require similar services to those of traditional insurers, but one aspect of RRG operations not found in traditional insurance carriers is the captive manager.
RRGs that are regulated in states with captive laws such as Vermont, South Carolina and Hawaii are required to have captive managers that not only provide a range of management services to the RRG but also serve as a liaison between the RRG and the state regulator.
In Vermont, for example, the individual captive manager, rather than the captive management firm, is approved by the captive division of the Vermont Department of Banking, Insurance, Securities and Healthcare Administration. In other jurisdictions, such as South Carolina and the District of Columbia, the captive management firm itself is approved by the department.
In analyzing 2004 data, the Risk Retention Reporter found that the pool of captive managers for RRGs has grown. Last year, 25 captive management firms were selected to provide services to the 54 RRGs formed during the year. The year before, 22 firms were chosen for the 58 RRGs formed in 2003.
In 2003, three firms tied for first place, managing nine RRGs each: Aon Insurance Managers (USA) Inc.; Marsh Management Services Inc.; and USA Risk Group. Risk Services Companies came in second with management of seven RRGs.
Last year, Risk Services jumped to the top of the list, accounting for management of 10 RRGs formed in 2004, with Marsh coming in second with eight, followed by USA Risk Group with five and Aon with four.
The accompanying table lists captive management firms that manage two or more RRGs formed in 2004, compared to 2003.
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 Edition, March 4, 2005. Copyright 2005 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.
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