RRGs Draw More Members From Workers' Comp Pools

RRGs Draw More Members

From Workers' Comp Pools

Two recently formed risk retention groups--one insuring nursing homes and the other trucking companies--have sprung from workers' compensation pools.

The exposures insured by the two entities are different, as the pools insure workers' comp exposures while RRGs insure third-party liability risks.

However, the leap from workers' comp pools to RRGs is logical--both require an underlying commitment to risk management and loss prevention practices to be successful.

The Liability Risk Retention Act has a built-in homogeneity requirement that RRG members be engaged in similar businesses or activities with respect to the liability to which they are exposed. Similarly, many workers' comp pools are comprised of homogeneous insureds.

This homogeneity provides the ability for RRGs to use many of the risk management programs found to be successful in running the pools.

In some cases, RRGs draw new members from a single self-insured pool, while in others members are drawn from several self-insured pools within the same industry.

Whatever the source, each member that becomes an RRG insured hopefully carries with it the strong risk management philosophy that enabled the self-insured workers' comp pool to be a success.

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.

"The leap from workers' comp pools to RRGs is logical--both require an underlying commitment to risk management and loss prevention practices to be successful."

Karen Cutts