RRGs can only write liability coverage. Captives can write coverage for buildings, collision, cargo, and a slew of other topics. Key differences between captive insurance and a risk retention group mean different things for different companies. Refer to this article to decide how these differences benefit your organization and get the right insurance today.
For more informative articles on insurance and other topics, check out the rest of our site! Save my name, email, and website in this browser for the next time I comment. Table of Contents. Risk retention groups may also be required to provide regulators with more information about their financials in order to ensure that they are financially solvent. Under the McCarran-Ferguson Act , most insurance matters are regulated at the state level, rather than federal.
After several years of study, it passed the Product Liability Risk Retention Act of , which permitted individuals or businesses with similar or related liability exposure to form "risk retention groups" for the purpose of self-insuring.
The act only applied to product liability and completed operations insurance. Late in the s, when companies faced similar issues obtaining other types of liability insurance, Congress acted again with the passage of the Liability Risk Retention Act LRRA , which extended the reach of the original Product Liability Risk Retention Act to commercial liability insurance. Under the LRRA, a domiciliary state is charged with regulating the formation and operation of a risk retention group.
The LRRA pre-empts "any state law, rule regulation, or order to the extent that such law, rule, regulation or order would make unlawful, or regulate, directly or indirectly, the operation of a risk retention group.
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I Accept Show Purposes. However, they are restricted to writing liability coverage. Skip to content Menu Utah Insurance. Are There Different Types of Captives? How do I convert a foreign domiciled captive insurance company to a Utah domiciled captive?
What Types of Captives are available in Utah? What is a Captive Insurance Company? Branch Captives: A branch captive is an on-shore US arm of an off-shore captive.
Special Purpose Captives: A special purpose captive is owned or controlled by a parent company and may only insure the risk of its parent. Group Captives A Group Captive is a captive insurance company owned and controlled by two or more non-affiliated organizations insured by the captive. Each of these captives is briefly described below: Association Captives: An association captive is owned by members of a common industry or trade association.
Whilst no insurance risk is transferred out of the organisation, except through reinsurance arrangements designed to protect the captive, a pure captive allows a company to monitor its operational risks, review its loss exposures and to provide efficient claims management to it and its subsidiaries. A Group Captive is a captive that is owned by a number of different parent companies who are normally from the same industry.
Companies often elect to use a group captive when:. Group captives can have a potential drawback in that that profits can be impacted by the poor performance of any single party.
Consequently, group captives often employ independent underwriting managers to accept and decline business. Association Captives. An Association Captive is similar to a group captive except that it is sponsored or owned by an association, which is normally homogenous in nature.
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