As the number of risk retention groups has skyrocketed in the past three years, so has the premium generated by these member-owned insurers enabled by the 1986 Liability Risk Retention Act.
Since year-end 2001, the number of RRGs has risen by more than 100, bringing the total number of RRGs to 186 at year-end 2004, and to 194 as of June 2005, according to Risk Retention Reporter.
Annual premium for RRGs in 2004 totals $2,197.1 million, as compared to 2003 premium of $1,737.7 million, an increase of $459.4 million.
Over the last three years, year-to-year percentage increases have been in the double digits, with RRG premium increasing by 34.0% in 2002, 37.4% in 2003, and 26.4% in 2004.
RRG premium development reflects hard and soft market cycles. By contrast to the last three “hard market” years, year-to-year percentage increases during the last of the “soft market” years were in the single digits, with RRG premium increasing by 1.7% in 1998, 0.7% in 1999, and 4.3% in 2000.
While RRG formations have slowed in the first half of 2005 — 11 compared to 25 in 2004 for the same period — premium generated by these entities can be expected to continue an upward trend, as existing RRGs expand their scope of operations and new RRGs continue to form.
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