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If you’re like most consumers, you’re concerned about insurance rates. The rates you pay are directly related to an insurance company’s expenses, particularly what they pay out in claims.
One way to keep rates down is to keep claims down, and you can help do that by educating yourself regarding the risks you face at work every day. Lowering your risk exposures not only helps you lessen the chances of being involved in an insurance claim, it can also save you time away from work, the cost of your deductible, and the stress that comes with being sued.
On this page you will find a growing collection of risk management articles, case studies and tools designed to help educate SERVPRO® Franchisees about the risks associated with the restoration industry, along with additional information about commercial insurance and how it works.
The Advantages of Being in a Risk Retention Group
A risk retention group (RRG) is an alternative form of insurance company created by the federal Liability Risk Retention Act of 1986 to give members of specific industries more control over their liability insurance.
The members of an RRG are limited to people engaged in the same businesses, and therefore are exposed to the same types of liability. As of February 2014, there were 244 RRGs in the U.S.
The following are several key advantages to being in an RRG:
As RRGs are owned by its members, one of the key advantages relates to the control members obtain over their liability insurance program. This control often translates into lower rates.
Profits Retained by Policyholders
As RRGs are owned by their members, any profits are retained by policyholders rather than being passed on to a commercial insurer.
Because the members of an RRG all work in the same industry, they have more knowledge about their risk exposures and therefore can design coverage that meets their specific needs, oftentimes giving them access to coverage not found on the regular insurance market.
The Liability Risk Retention Act is a federal law which allows the RRG to do business in all states.
During fluctuating market conditions, when insurance companies may be eliminating coverage and cancelling policies, an RRG provides its members with more stability.
Members often share risk management information about their businesses, which can help their operations and in turn help reduce claims, thereby reducing premiums for the RRG.
RRGs are often managed by an insurance administrator with special expertise in the member’s industry, resulting in more efficient underwriting, customer service and claim services.
Depending on its claim experience and financial results, some RRGs offer members a dividend at the end of the policy period. Dividends are not guaranteed and may vary depending on the amount of the client’s premium and years in the RRG.