Catching Up on Purchasing Groups with Dan O’Leary

Purchasing groups were authorized by Congress along with risk retention groups under the 1986 Liability Risk Retention Act. Unlike risk retention groups, purchasing groups are not insurance companies. Instead, the purchasing group vehicle allows members with a similar risk profile to purchase liability coverage on a group basis. The purchasing group also makes it easier for its members to purchase coverage from non-admitted and surplus lines carriers.

Due to purchasing groups not being risk bearing entities themselves, reporting requirements for PGs are laxer than they are for risk retention groups. This had made it challenging to pin down the exact number of active purchasing groups and to get a handle on how much premium flows through purchasing groups.

Even so, purchasing groups run into similar issues as risk retention groups regarding interactions with non-domiciliary states, such delays in registration approval and additional documentation requests not required under the Liability Risk Retention Act.

The Risk Retention Reporter spoke with Dan O’Leary, Of Counsel at Mandell Menkes LLC and a long-time leader in PG formations, to get an update on what’s happening in the purchasing group space. The conversation touches on the benefits of the purchasing group vehicle, the process of registering purchasing groups, and how the purchasing group industry differs from the risk retention group industry.

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