Annual premium for RRGs in 2004 totaled $2.197 billion, compared to 2003 premium of $1.737 billion--an increase of $459.4 million.

Over the last three years, year-to-year percentage increases have been in the double digits, with RRG premiums increasing by 34 percent in 2002, 37.4 percent in 2003 and 26.4 percent in 2004.

In contrast to the last three "hard market" years, year-to-year percentage increases during the last of the "soft market" years were in the single digits, with RRG premium increasing by 1.7 percent in 1998, 0.7 percent in 1999 and 4.3 percent in 2000.

While RRG formations have slowed as the commercial insurance market has softened in the first half of 2005--11 compared to 25 for the same period in 2004--premium generated by these entities can be expected to continue an upward trend, as existing RRGs expand their scope of operations and new RRGs continue to form.

Karen Cutts is editor and publisher of the "Risk Retention Reporter" in Pasadena, Calif. Visit www.rrr.com for information on risk retention groups and purchasing groups.

Flag: By The Numbers

Head: Will Risk Retention Boom Go Bust?

Caption:

While formations are slowing as the insurance market softens, RRG premiums should keep rising as existing facilities expand their scope and new entities form for hard-to-place risks.