By Christopher Diemel, Managing Editor, Risk Retention Reporter
As reported in the March 2023 Risk Retention Reporter, the risk retention group industry reported record premium growth in 2022. While the total growth in dollar terms remains $558.1 million, total RRG premium has been revised upwards to $4902.8 million in 2022 and to $4344.7 million in 2021 due an additional annual statement filed by an RRG in late May.
2022 marks the twelfth consecutive year of premium growth for the risk retention group industry. Overall, 163 risk retention groups posted premium gains—with 14 risk retention groups reporting premium increases of more than $10 million—while 63 reported premium declines. Premium was flat at 18 risk retention groups.
As in 2020 and 2019, premium growth in 2021 was well distributed across business sectors. The Financial sector was the only sector to see a premium decline in 2022, with premium declining by 8.7% to $72.3 million. The largest increase in percentage terms was in the Property Development sector which saw premium increase by 40.2% to $279.3 million. In dollar terms, the strongest growth was in the Healthcare sector, which saw premium increase by 14.5% to $2,922.8 million, a gain of $370.0 million over the $2,552.8 million reported in 2021.
RRG Premium Growth by Business Sector, 2018 to 2022 ($M)
| 2022 | 2021 | 2020 | 2019 | 2018 | |
| Environmental | 18.6 | 17.4 | 16.1 | 26.9 | 10.3 |
| Financial | 72.3 | 79.2 | 72.5 | 84.7 | 81.2 |
| Government & Institutions | 665.9 | 604.0 | 506.3 | 410.7 | 362.8 |
| Healthcare | 2922.8 | 2555.4 | 2221.1 | 2068.8 | 1886.2 |
| Leisure | 13.0 | 8.4 | 7.6 | 7.3 | 6.9 |
| Manufacturing & Commerce | 57.6 | 47.7 | 48.6 | 45.7 | 40.1 |
| Professional Services | 451.5 | 426.6 | 441.1 | 436.1 | 433.0 |
| Property Development | 279.3 | 199.2 | 201.3 | 204.4 | 188.0 |
| Transportation | 421.7 | 413.0 | 309.2 | 292.2 | 288.5 |
| TOTAL | 4902.8 | 4344.7 | 3824.0 | 3574.7 | 3302.0 |
| Percent Change | 13.0 | 13.6 | 7.1 | 8.3 | 1.7 |
Growth was also strong in the Government & Institutions sector, with premium increasing by 11.7% to $665.9 million in 2022 from $596.3 million in 2021. Twelve of the thirteen active risk retention groups in the sector reported increases in premium.
Retired risk retention groups had a negligible impact on RRG premium. Although nine risk retention groups have retired since June of last year, most of those RRGs had little to no reported premium. The largest RRG to retire was Broadline RRG which reported premium of $23.8 million in 2021. However, Broadline RRG merged with Mountain Laurel RRG and, as a result, its retirement did not contribute to a decline in RRG premium.
While new RRG formations slowed in 2022, and retirements picked up slightly, the number of active risk retention groups still increased to 242 over the course of the last year. According to discussions with domiciliary states, some additional RRG formations are in the pipeline further contributing to recovery in the risk retention group industry after steep declines in the number of operational RRGs during the soft market of the 2010s.
In addition to growth in the number of operational RRGs, established RRGs have continued to see strong premium growth and increasing market share in their respective lines of business.
Environmental Premium Growth
Premium growth continued in the small Environmental sector with premium increasing by 6.7% to $18.6 million. Premium in the Environmental sector has seen significant fluctuations over the past five years but has continued to recover after bottoming out at $8.4 million in premium in 2017. The formation of Canopy RRG took premium in the sector up to $26.9 million in 2019, with the RRG reporting premium of $16.5 million in its first year of operation. Premium at Canopy RRG locked in at $2.6 million in 2020 and 2021, contributing to the steep 2020 premium decline in the sector. Premium at Canopy RRG saw modest increase to $2.8 million in 2022.
Apart from Agri Insurance Exchange RRG, which saw a modest premium decline of 2.0%, all of the other RRGs in the Environmental sector saw strong premium growth. The largest growth was at STICO Mutual Ins. Co. RRG, which saw premium increase by 10.4% to $5.6 million.
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