(This article was derived from a presentation at the Third Annual Target Markets Program Administrators Summit, which was held in October in Tempe, Arizona.)
PROGRAM administrators have a number of options for obtaining insurance for their programs. They can work with admitted or nonadmitted insurers in the customary fashion. They also can pursue "alternative market" mechanisms, like captives and rent-a-captives. Yet another option-and one we'll explore in this article-is to form a purchasing group.
Purchasing groups and risk retention groups were first authorized by the federal Product Liability Risk Retention Act of 1981. It permitted the formation of these entities for insuring product liability or completed operations risks. Five years later, Congress approved the Liability Risk Retention Act, which extended the concept to most commercial liability risks.
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