To better inform you about your options, we've compiled the questions that physicians ask us most often.

• What is a risk retention group?
• What is the Liability Risk Retention Act?
• Who owns the risk retention group?
• Who regulates risk retention groups?
• What are the advantages of risk retention groups?
• Will risk retention group premiums for all physicians be lower?
• How much risk do risk retention groups retain?
• Are risk retention groups secure?
• How many risk retention groups are in operation today and are they successful?
• How can I get more information on Risk Retention Groups?
• How do I join Physhield?
• How do I contact Physhield?

1. What is a risk retention group (RRG)?

Risk retention groups were authorized by the Liability Risk Retention Act, passed by Congress in 1986 to help businesses, non-profits and municipalities obtain affordable liability insurance. RRG's are owned by their members and organized for the primary purpose of assuming and spreading the liability risk exposures of their subscribers, i.e. group member-owners. RRG's must be chartered and licensed as a liability insurance company in one of the fifty states or the District of Columbia, which becomes the RRG's state of domicile. Unlike commercial insurers, once the RRG has obtained a license from its state of domicile, it may operate in all other states without the burden of obtaining additional state licenses. Group members must be engaged in similar work but they can be located anywhere in the U.S. Numerous professional groups, non-profit organizations and public entities have established RRG's and the growth of physician-owned RRG's has been very high in recent years as doctors sought to stabilize and control their insurance programs and hold down their premium rates.

2. What is the Liability Risk Retention Act (LRRA)?

The Liability Risk Retention Act (LRRA) is a federal law that Congress passed in 1986 to facilitate alternative mechanisms for group insurance programs, and, help businesses, professionals and municipalities obtain affordable liability insurance. The goal was to promote greater premium competition and reduce costs.

3. Who owns the risk retention group?

The RRG is owned by its insured members. These owner-members contribute the required capital surplus, often as a component of their premium payments. The amount of capital surplus is determined by the premium rate and level of exposure subject to state required minimums. In healthcare, RRG owner-members can include business entities and professionals who share medical liability risk, including hospitals, free standing facilities, physicians from all specialties practicing in groups or as individuals, and other licensed providers.

4. Who regulates risk retention groups?

While the federal Liability Risk Retention Act (LRRA) authorized risk retention groups, the state insurance department where the RRG is domiciled has primary regulatory authority over the entity. Each state has its own RRG regulations, which vary from being more or less restrictive, but the state regulations cannot preempt the provisions of the federal LRRA. States with the most favorable regulations include Arizona, Nevada, South Carolina, the District of Columbia, Hawaii and Vermont. The LRRA allows the RRG to be domiciled in one of these states regardless of the location of the insured owner-members.

5. What are the advantages of risk retention groups?

The RRG owner-insureds own the insurance company and appreciate all the benefits of equity ownership, including receiving dividends from profitable operations. The owner-insureds govern the operation of the RRG and control the underwriting guidelines, investment philosophy, claims practices and the other key aspects of their medical liability insurance program. The increased control often means more effective loss control/risk management programs, member participation in favorable loss experience and reduced operating expenses, which translate into lower premiums, broader coverage, access to reinsurance markets and stable coverage. Of importance is that in the long term the RRG members are assured their cost of coverage will be the actual cost of claims and administration, not cost plus insurer and shareholder profits.

6. Will risk retention group premiums for all physicians be lower?

Physicians who have high risk practices often do not see lower premiums in risk retention groups or other captives because the actual cost of their claims may be more than the premium they pay to a traditional insurer.

7. How much risk do risk retention groups retain?

Risk retention groups can retain all or any portion of the risk. The amount depends on the capital surplus requirements, the availability of reinsurance, the coverage limits written, and the owner-members' capability to manage the risk. The optimal amount of retention, based on claim statistics including the owner-insureds' loss history, will be calculated by an actuary for the initial underwriting analysis and as part of ongoing operations. The RRG Board ultimately makes the final decision.

8. Are risk retention groups secure?

Risk retention groups offer the same level of security as commercial insurance companies since RRGs are regulated by the insurance department of the state of domicile under the guidelines of the National Association of Insurance Commissioners. The annual rate of insolvencies for all RRGs is comparable to that of traditional property casualty insurance companies at approximately one in 100 companies. The policies issued by the RRG are not assessable, meaning that insureds can not be assessed payments, in excess of premium amounts, to cover past company losses for which reserves have proven to be inadequate. State sponsored insurance insolvency guaranty funds are not available for RRGs and RRGs are not assessed to cover the losses of any insolvent insurance companies that do participate in the guaranty funds. The security for the RRG is provided by the owner-insureds' long-term commitment to the program,

9. How many risk retention groups are in operation today and are they successful?

As of June 2009, there were 255 RRG's, an increase of more than 170 since the end of 2001, according to the industry publication Risk Retention Reporter. Approximately 50% of total RRG premium is generated by physicians and healthcare organizations.

10. How can I get more information on Risk Retention Groups?

The National Risk Retention Association (NRRA) offers information to members and nonmembers at its website www.nrra-usa.org. The Risk Retention Reporter, the leading RRG publication, offers information to the general public at its website at www.rrr.com. For more information on how an RRG can work for you, please contact Physhield's Customer Service department at (305) 779-1740.

11. How do I join Physhield?

You simply complete Physhield's Medical Liability Questionnaire click here and submit it with your historical claims information plus your insurance coverage and premium history, including the program that insures you currently. Physhield will underwrite and price your risk and issue a proposal for you to compare to other coverage alternatives. Please provide the information 60 days before you current coverage expires. Should you join Physhield, your coverage becomes effective on your next renewal date with payment of the premium and the required capital contribution. The capital contribution equals one third of the initial premium based on the claims-made, mature premium rate. Physhield offers 'nose' and 'tail' coverage to qualified physicians to prevent gaps in coverage.

12. How do I contact Physhield?

Physhield's Executive and Administrative Headquarters are located at 700 S Royal Poinciana Boulevard, Suite 506; Miami, Florida 33166. Telephone 305-779-1740, fax 305-779-1778, email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .