The number of risk retention groups formed so far this year is higher than in any other first quarter over the past five years, surpassing both 2003 and 2004–years in which record numbers of RRGs were launched.

There were 58 RRGs formed in 2003 and 54 in 2004–but launches slowed down during the softening commercial lines market last year, with the total falling to 33.

However, in the first quarter of this year, 12 new RRGs have already been added to the Risk Retention Reporter listings. This is compared to only five during the corresponding period last year.

In addition, since the pace of formations in the first quarter has been significantly slower than the rest of the year over the last three years, if this pattern continues through 2006, RRG formations may well exceed the record year of 2003, and thus hit an all-time high.

Of the 12 new RRGs added in the first quarter of this year, 10 are in the health care sector. This continues the dominance of the sector over the last several years–illustrated in the accompanying graph.

Of these 10 RRGs, eight provide liability coverages to physicians–including those employed by hospitals or with staff privileges, as well as individual physicians practicing in groups or in HMOs.

The other health care RRGs established in the first quarter of 2006 provide liability coverages for hospitals and affiliates, and rehabilitation and nursing facilities.

RRGs providing liability coverage to physicians, hospitals, nursing homes and allied health care professions continue to represent the largest percentage of total RRG formations.

For 2005, gross written premium for health care RRGs totaled an estimated $1.3 billion. This compares to the $2.5 billion in estimated gross written premium for all RRGs last year.

Special Reports /

Health Care Sector Fueling RRG Growth

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