Popularity of RRGs Increases
The number of physicians and hospitals insured by risk retention groups (RRGs) has increased to 30 percent of the state insurance market, according to the state Insurance Department.
RRGs are self-insurance entities established by federal law. They allow those in a similar profession who are exposed to similar risk to pay into a pool that covers that risk.
In Pennsylvania, RRGs began rising in popularity among physicians around 2001 when premium costs spiked and the state’s two traditional malpractice insurance companies stopped writing new policies.
The only other option for physicians was the state’s Joint Underwriting Association (JUA) insurance, which is very expensive.
While less expensive, RRGs also offer less protection because they are not covered by Pennsylvania Property and Casualty Insurance Guaranty Association (PIGA).
With a traditional insurance company, PIGA covers up to $300,000 in unpaid claims if the insurance company goes bankrupt. RRG policyholders do not have this protection. If the RRG goes bankrupt, the policyholder’s personal assets would be completely at risk.
Though the liability insurance market has improved, the fact that RRGs still compose such a large portion of Pennsylvania’s market could indicate a lack of basic insurance capacity in the market, the Insurance Department said.
Last Updated: 8/13/2008