RRGs Draw More Members

From Workers' Comp Pools

Two recently formed risk retention groups--one insuring nursinghomes and the other trucking companies--have sprung from workers'compensation pools.

The exposures insured by the two entities are different, as thepools insure workers' comp exposures while RRGs insure third-partyliability risks.

However, the leap from workers' comp pools to RRGs islogical--both require an underlying commitment to risk managementand loss prevention practices to be successful.

The Liability Risk Retention Act has a built-in homogeneityrequirement that RRG members be engaged in similar businesses oractivities with respect to the liability to which they are exposed.Similarly, many workers' comp pools are comprised of homogeneousinsureds.

This homogeneity provides the ability for RRGs to use many ofthe risk management programs found to be successful in running thepools.

In some cases, RRGs draw new members from a single self-insuredpool, while in others members are drawn from several self-insuredpools within the same industry.

Whatever the source, each member that becomes an RRG insuredhopefully carries with it the strong risk management philosophythat enabled the self-insured workers' comp pool to be asuccess.

Karen Cutts is editor and publisher of the "Risk RetentionReporter" in Pasadena, Calif. Visit www.rrr.com for information on riskretention groups and purchasing groups.

"The leap from workers' comp pools to RRGs is logical--bothrequire an underlying commitment to risk management and lossprevention practices to be successful."

Karen Cutts