What type of insurance coverage can a Risk Retention Group (RRG) NOT write?

Risk Retention Groups (RRGs) are specialized insurance entities that are formed to provide liability coverage for their members, who typically share similar risks. While RRGs can certainly focus on offering various types of liability insurance, the scope of what they can cover is regulated.

Employers' liability coverage often falls under the umbrella of workers' compensation insurance. However, the key distinction is made when it comes to the actual provision of workers’ compensation benefits, which include coverage for medical expenses and lost wages due to work-related injuries. RRGs are specifically prohibited from writing workers’ compensation policies due to regulatory constraints designed to protect policyholders and ensure that adequate protection is in place for workplace injuries.

This limitation is crucial because workers’ compensation systems are heavily regulated at the state level, requiring certain guarantees regarding the financial responsibility of insurers and the prompt payment of claims. Thus, while RRGs can be involved in liability coverage related to workplace injuries, they cannot assume the same responsibilities that come with workers' compensation insurance. This distinction is essential for understanding the regulatory landscape governing RRGs and their operations.