A risk retention group ("RRG") is a liability insurance company that is owned by its member insureds and formed under the Liability Risk Retention Act, which was passed into law by Congress in 1986. The Liability Risk Retention Act (LRRA) is a federal law that helps U.S. businesses, professionals, and municipalities obtain liability insurance which had become either unaffordable or unavailable due to "liability crisis" problems in the United States, which had caused liability insurance to become either commercially unavailable or unreasonably expensive. Under the LRRA, an RRG must be formed and domiciled in one state. Once licensed by its state of domicile, an RRG can insure members in all of the states of the U.S. , provided that it registers in each state. Because the LRRA is a federal law, it preempts most state regulation, making it easier for RRGs to operate nationally under uniform legislation. Under the LRRA, the membership of the RRG must be relatively homogeneous: operating in a similar business or profession (i.e., medical practitioners) which exposes them to similar risks. The primary requirements of a RRG include that:

• It can only write liability insurance
• There must be more than one insured/owner
• All insureds must be owners and likewise all owners must be insureds

There are over 221 RRGs currently operational in the United States as of February 2006, representing over $2 billion in premiums written. Collectively, these companies insure a significant percentage of America's private practice physicians. Since the hard insurance market that started in 2001 there have been over 150 new RRG formations, compared to only about 20 in the prior decade. The resurgence of RRG formation is a direct result of the unavailability of insurance for many professions and industries, and RRGs have been established to provide affordable and dependable professional liability insurance free from the uncertainties of the commercial market.

There are over 60 doctor-owned insurance companies in the United States, according to the Physicians Insurance Association of America (PIAA). Many of these RRGs have become successful providers in the marketplace in fields such as Anesthesiology, Emergency Medicine, Oral Surgery, and Ophthalmology.

The Advantages

Through its focus and dedication to a single specialty, RRGs like NMP can provide more comprehensive coverage at stable rates through its understanding of the specialty and the expert resources available to manage and defend claims. For example, the use of expert peer review enables doctor-owned RRGs to more vigorously defend their insureds when negligence is nonexistent, rather than agree to a settlement. This strategy will ultimately lead to:

• lower rates and
• more stable coverage in which premiums are less susceptible to the volatility of insurance market cycles.

Effective risk management is also a primary advantage of NMP. Since NMP is specialty specific, it will be able to leverage its loss and claims data over time to better understand and prevent potential liability within the oncology field. NMP is developing a variety of programs and benefits to educate members on best practices and risk management procedures. Over time, these efforts should enhance quality of care in the physician practice and lower the chance of malpractice liability. Given the rapidly evolving nature of the oncology field, it is imperative that physicians be kept abreast of the latest trends in medical malpractice within their specialty.