The past year has much resembled 2013 as three trends—court victories, financial stability and a soft market—continued in the risk retention group (RRG) market, according to JLT Towner Insurance Management.
As in previous years, a handful of court cases featured states unsuccessfully testing provisions of the federal Liability Risk Retention Act (LRRA) that preempt regulation by non-domiciliary states. While successful in court, the sector became smaller.
There have been 18 RRG retirements in 2014, as of October, dropping the total number to 236. However, RRGs continue to improve their financial stability, increasing reserves and income.
“That the market remains soft is probably the biggest story in a relatively uneventful last few months,” said JLT Towner Insurance Management partner Len Crouse.
“When the market is this soft, RRG formation is usually slow. This period is no different. You can also partially attribute a drop in the number of RRGs to the soft market.”
“Some RRGs dissolved to take advantage of very low rates in the traditional markets.”
