Mr. Tepper said Security America "is intended to cover the general liability and professional liability exposures."

He told National Underwriter that the response from members has been "encouraging. This has literally only been out there for a few weeks, and the response, from what I'm hearing from the director of the NBFAA, has been positive?literally several calls every day."

Mr. Tepper said that most insureds involved in the risk retention group will be "the experienced and probably more established operators in the burglar and fire alarm businesses. It's also going to be critical that they are financially sound."

He added that "we're requesting that they have at least three years of operating experience or five years managing another company."

Though the coverages are available in the general market, "the price has skyrocketed, the deductibles have gone up and the limits have contracted," Mr. Tepper explained.

The retention group, he noted, is intended to make coverage available to members on an ongoing basis and will provide a mechanism for NBFAA members to participate actively in the management of their own risks.

The Security America Risk Retention Group Inc. was licensed in the domicile of Vermont on Sept. 4.

Because Security America qualifies as a risk retention group under federal law (the Liability Risk Retention Act), it will be able to insure the liability of NBFAA members throughout the country without having to obtain a license to do business in each state, according to Buchanan Ingersoll. The ability of an RRG to operate across state lines while being subject to regulation by only its state of domicile distinguishes risk retention groups from traditional insurers.

"Every industry has felt the crunch of this hard insurance market; the alarm industry is no exception," explained Bryan Lawrence, counsel to the NBFAA and co-chair of the firm's Security Alarm Group, in a statement. "The NBFAA wanted to help ease this burden on the industry."

Mr. Tepper said that forming the risk retention group was a step in the right direction for the NBFAA.

"Regardless of your industry, risk is a guaranteed by-product of operating a business enterprise. But while traditional insurers may insure simultaneously different types of risks generated across multiple industries, the risk retention group model provides an industry-specific solution. That's one of the reasons why it has become the insurance mechanism of choice for many trade associations throughout the country."

NBFAA, founded in 1948 and with more than 2,000 members in 50 states and four U.S. territories, owns a majority of the stock in the new insurer, said Buchanan Ingersoll.