Reciprocal Risk Retention Group
United Educators (UE) is one of the first and largest risk retention groups (RRGs) formed since Congress enacted the Liability Risk Retention Act (LRRA) in 1986.
Recognizing a crisis in the liability insurance market, Congress passed the LRRA in 1986, allowing similar institutions or businesses to form RRGs to share and retain liability risks.
UE was one of the first and is one of the largest RRGs formed since Congress enacted this legislation. RRGs are a form of a captive insurance company, formed to meet the unique insurance needs of a specific type of organization or business.
Unlike traditional commercial insurance companies, which are regulated in each state in which they do business, RRGs are licensed in one state and can serve members in all states. RRGs are expected to be experts in their specific market and to price insurance policies accurately. Because of the shared ownership and expertise, they have a strong and vested interest in the RRG’s long-term success. Consequently, RRG policy holders don’t have access to state guaranty funds.
UE’s form of ownership is a non-assessable reciprocal. This structure allows UE to individually underwrite and separately account for each individual member’s capital investment in UE. As a reciprocal, UE is a for-profit association owned and governed by about 1,600 independent schools, public school districts, public school pools, colleges, universities, and education associations. Each new UE member executes a subscriber’s agreement and power of attorney, appointing UE as its attorney-in-fact so it can exchange insurance risks with all other UE members.