Q: What is a Risk Retention Group?
A: A risk retention group (RRG) is a policy issuing liability insurance company that is owned by its member insureds and formed under the Liability Risk Retention Act (LRRA) of 1981, as amended in 1986. The LRRA is a federal law that helps US businesses, professionals, and municipalities to create their own solutions for liability insurance which has become either unaffordable or unavailable due to Liability crisis problems in the United States. The LRRA permits a RRG to operate on a direct basis in all 50 states and the District of Columbia under one state license, provided that it registers in each state in which it conducts business. The LRRA is a federal law and therefore preempts most state regulation, making it easier for RRGs to operate nationally under uniform legislation.
The primary requirements of a RRG include that:
- A. It can only write liability insurance
- B. There must be more than one insured/owner
- C. All insured’s must be owners and likewise all owners must be insureds
Under the LRRA, the membership of the RRG must be relatively homogeneous: operating in a similar business or profession which exposes the group to similar risks.
Q: Who regulates an RRG?
A: The state of domicile reviews Lancet RRG financial statement quarterly and such statements are also filed with the National Association of Insurance commissioners. Lancet RRG has filed a business plan with its state of domicile specifying its scope of business and the state where it plans to write insurance. Other non-domiciled states do have some overview right as noted above. The reinsurer of Lancet RRG has a strong vested interest in Lancet RRG’s well being and Lancets RRG’s business plan, underwriting guidelines and financials are provided to and approved by its reinsurer. Reinsurer visits Lancet RRG at least annually to audit its underwriting files for compliance with the agreed upon business plan.
Q: Do states guarantee funds apply to RRGs?
A: No. As noted above, RRGs like Excess & Surplus Lines carriers are not required to contribute to any state guarantee fund so they are not supported by those same guarantee funds in the event of insolvency. However, it should be noted that in an insolvency, state guarantee fund vary from state to state, but generally provide only a limited amount of coverage (typically $300,000 per claim) restrict the time available to report a claim and assign their defense counsel to handle claims. However, Lancet is reinsured by a Lloyd’s of London syndicate.
Q: What are the benefits of an RRG?
A: The insured experiences stabilized annual premiums at a reduced cost.
Q: What is the legal structure of Lancet?
A: Lancet is a Limited Liability Corporation founded by Physicians, domiciled in Nevada and owned by it’s insureds.
Q: Can I finance premium or capital contributions?
A: Yes, Lancet now offers in-house financing at affordable rates or you may use a company of your choice.
Q: What type of policies does Lancet offer?
A: Lancet RRG offers two different types of coverages, Lancet Preferred and Lancet Select. Lancet preferred is similar to your basic malpractice coverage. Lancet Select is coverage that is designed toward groups, captives or associations.
Q: What limits are available?
A: Various limits are available to members from $100,000 per claim to $1,000,000 per claim depending on the state in which the insured has its medical practice. Individuals policy aggregates are three times the per claim limit and physician group policy aggregates determined on a case by case basis. In states where the statutory maximum limits are lower than set forth above, the maximum limits of coverage will be those allowed by statue.
Q: Does Lancet provide tail coverage?
A: Yes, tail coverage will be offered. The cost and structure of tail end policies will be under the governance of the board of directors as is beneficial to the long term success of the company and its physician members. As stated elsewhere, tails are not necessary for individuals departing our group coverage program. Terminated locations can be placed into a run-off position.
Q: Who manages the day to day operations?
A: Insurance executives with over 35 years of medical malpractice experience
Q: Does Lancet have audited financials?
A: Yes, reviewed and audited quarterly, the independent CPA firm of Shores, Tagman & Company will perform an annual audit of the financial statements.
Q: Does Lancet have reinsurance?
A: Yes. Lancet RRG purchases reinsurance, which is provided by certain Lloyd’s of London syndicates, each of which are approved by the Nevada Division of Insurance and have an A.M. Best rating of A – (excellent) or better.