RRG success requires proactive management and governance
Risk retention groups (RRGs) that are well managed and governed possess key benefits that allow them to thrive, a panel at CICA 2023 told attendees.
The panel, which included Nancy Gray, regional managing director at Aon, Julie Bordo, chief executive/president of PCH Mutual Insurance, Sean O’Donnell, director of financial examination, risk finance bureau at DC Department of Insurance, and Dianne Salter, president of Mountain Laurel RRG, agreed that there were some important ways of ensuring best practices.
Best practice includes good corporate governance, having a knowledgeable and active board of directors and making sure that RRG owners are committed through both hard and soft insurance cyclers, according to the panel. The told the audience that best practice also includes having a robust business plan, good risk management, ongoing checks and balances and having an experienced and qualified team of managers, actuaries and legal counsels, among other professionals.
Bordo stressed that proactive communication was important across the structure of a RRG, so that any problem areas can be rapidly identified and addressed before they become too much of an issue.
The panel highlighted some potential areas to watch that show when a RRG is starting to fail, such as a deterioration in corporate governance, with board members leaving or retiring, regulators not being kept in the loop and therefore not approving changes to business plans, lax underwriting and reserve deterioration.
The session concluded with a simple message from the panel: keep an open mind to innovation and change.