The Risk Retention Act of 1986, which is an amendment to the Product Liability Risk Retention Act of 1981, was established as a federal statute to facilitate the creation and function of Risk Retention Groups (RRGs) and Purchasing Groups (PGs).
Key Features
Facilitation of RRGs and PGs: This Act allows for the easier formation and efficient operation of Risk Retention Groups and Purchasing Groups. These groups are mechanisms through which members can pool their liability risks to improve purchasing power and insurance stability.
Amendment to 1981 Act: By amending the 1981 Act, the 1986 Act expanded the scope and facilitated greater flexibility in the insurance market, particularly concerning liabilities related to product manufacturing and services.
Regulatory Oversight: Both Risk Retention Groups and Purchasing Groups formed under this Act are subject to state insurance regulations, ensuring a structured and secure approach to managing and retaining risk.
Relevant Legislation
Original law: Product Liability Risk Retention Act of 1981
Amendments: The Act is updated and reviewed regularly to reflect changes in market conditions and regulatory requirements.
State-specific regulations apply, conforming to the guidelines and statutes outlined by the Risk Retention Act.
Importance in the Insurance Sector
The Risk Retention Act of 1986 plays a crucial role in how companies manage liability risks, particularly in industries with high exposure to product liability and professional liability claims. By promoting the formation of RRGs and PGs, smaller entities and organizations can effectively manage and distribute risks while possibly procuring lower insurance costs and tailored risk management solutions.
For more detailed information and to check the up-to-date regulations, refer to the official government documentation or consult legal expertise in the insurance law field.
