Is It Time for Rebound of Risk Retention Groups?

One of the legacies of the great insurance crisis in the mid-1980s was passage of the Liability Risk Retention Act of 1986, which led to the formation of hundreds of risk retention and insurance purchasing groups.

hose groups let smaller companies pool their resources and provide basic liability coverage at a time when the insurance market was severely constrained. Prices were spiraling out of sight after the enactment of a law that raised liability limits for truckers from the standard commercial auto rate of $100,000 for bodily injury and $300,000 for property damage to a combined rate of $750,000 or $1 million, depending on the type of operation, and $5 million for bulk hazardous-materials haulers.

fter an initial flurry of activity, however, risk retention and purchasing groups quickly faded from the scene as traditional insurers, flush with cash from investments in real estate and stocks, stormed back into the market with super low rates.

Now, with higher insurance rates and reduced coverage a reality once again, will risk retention and purchasing groups make a comeback? How many survived the war of attrition over the past decade?

For the full story, see the May 29 print edition of Transport Topics. Subscribe today.