Buying In Bulk Has its Privileges
The International Risk Management Institute (IRMI) describes a Risk Purchasing Group (RPG) as "a group formed in compliance with the Risk Retention Act of 1986 authorizing a group of insureds engaged in similar businesses or activities to purchase insurance coverage from a commercial insurer."
The purpose of an RPG is to allow professionals and businesses access to reduced insurance premiums through "bulk" insurance quoting. Getting insurance coverage as an individual or as one business can be expensive because the risk evaluation is based solely on that one business. With a group, an insurance carrier can distribute the risk over a larger pool of businesses while still bringing in the amount of premium they need to support that risk.
RPGs are individually licensed and authorized in each state but are regulated by a federal law, the Risk Retention Act of 1986, which authorized the formation of purchasing groups and group self-insurance programs for certain types of liability exposures. Not all types of insurance can be purchased through an RPG. The types of insurance allowed are commercial liability lines. Personal lines insurance and workers’ compensation insurance are not allowed.
