What is a Risk Retention Group (RRG)?

A Risk Retention Group (RRG) is correctly defined as a group captive that primarily focuses on writing liability coverage, but it is important to note that this group does exclude certain areas from its coverage. RRGs are formed under the federal Liability Risk Retention Act of 1986, which allows businesses engaged in similar activities to pool their risks and provide liability coverage for their members.

The nature of RRGs allows them to write liability coverage more flexibly compared to traditional insurance companies, as they are specifically created to meet the needs of their owners. However, RRGs often limit their offerings to specific types of liability insurance and may exclude certain risks that are deemed too hazardous or not aligned with the group's interests. This characteristic distinguishes them from more comprehensive insurance carriers that offer a wider range of coverages.

While the other options mention aspects associated with group captives or insurance organizations, they do not accurately capture the essence of an RRG, particularly in its liability focus and regulatory framework. Therefore, the correct choice highlights the key attributes and limitations of RRGs effectively.