What Is a Risk Purchasing Group in Malpractice Insurance?
Certain lawyers professional liability insurance policies are available exclusively through a Risk Purchasing Group (RPG). An RPG allows businesses or professionals with similar liability exposures to purchase liability insurance on a group basis. Purchasing coverage through that program requires paying the RPG fee.
What Is a Risk Purchasing Group?
Congress created the purchasing-group framework through the Products Liability Risk Retention Act of 1981 and expanded it through the Liability Risk Retention Act of 1986 (LRRA). The legislation responded to problems businesses and professionals faced obtaining affordable liability insurance allowing groups with similar or related liability exposures to purchase liability insurance on a group basis. The federal RPG law applies only to liability insurance, not property insurance.
How Do RPGs Apply to Attorney Malpractice Insurance?
Law firms share similar professional liability exposures, making lawyers professional liability insurance a natural fit for an RPG structure. An RPG provides members access to malpractice insurance through a contracted insurer. Certain RPGs offer additional services such as risk-management resources, forms libraries, risk-management information, and CLE webinars.
An RPG Is Not a Risk Retention Group (RRG)
A Risk Purchasing Group and a Risk Retention Group (RRG) are not the same thing.
An RPG purchases liability insurance for its members from an insurance carrier. A Risk Retention Group is a risk-bearing, risk-sharing insurance entity organized to provide liability coverage to its members relying on reinsurance to backstop the coverage. If the RRG loses its reinsurance the RRG coverage may disappear overnight. The distinction matters when evaluating who provides the insurance coverage.
Understand the RPG Fee
When Risk Purchasing Groups provide attorneys access to malpractice insurance and additional risk-management services, the RPG fee is not optional.
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Lee Norcross, MBA, CPCU
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L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
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