OASIS (Otolaryngology/Allergy Specialty Insurance Services) is a reciprocal risk retention group (RRG). Reciprocal RRGs are unincorporated associations of individuals that exchange contracts of insurance through an attorney-in-fact, which acts as an agent or manager. In the case of OASIS, the insurance contracts are ENT and Allergy specific.
ABOUT RISK RETENTION GROUPS
A risk retention group is a state-chartered and licensed commercial liability insurance company organized for the primary purpose of assuming and spreading all, or any portion of, the liability exposure of its group members. These members are both its owners and insured. Under the federal Liability Risk Retention Act, risk retention groups must be domiciled in a state and can only provide liability insurance. For reference, OASIS is domiciled in the state of Vermont . Once licensed by its state of domicile, a risk retention group can insure members in all states where it has registered to do business. Because the Liability Risk Retention Act is a federal law, it preempts many state laws and regulations, making it easier for risk retention groups to operate nationally.
LIABILITY RISK RETENTION ACT
The Liability Risk Retention Act is a federal law that was passed by Congress in 1986 to help U.S. businesses, professionals and municipalities obtain liability insurance which had become either unaffordable or unavailable due to the "liability crisis" in the United States . In passing the Liability Risk Retention Act, Congress provided insurance buyers with a marketplace solution to the "liability crisis", enabling them to have greater control of their liability insurance programs. To achieve this goal, Congress allowed the creation of two entities - risk retention groups and purchasing groups.
REGULATION OF RRGs
Although the Liability Risk Retention Act is a federal law, risk retention groups are primarily regulated by the state in which they are domiciled but are also subject to limited regulation by other states where they are registered. OASIS is domiciled in Vermont , and provides service in New York (NY) and New Jersey (NJ).
DIFFERENCE BETWEEN RISK RETENTION AND PUCHASING GROUPS
The primary difference between risk retention groups and purchasing groups is that risk retention groups retain risk while purchasing groups do not. Purchasing groups purchase insurance from an insurer, which issues the policies and serves as the risk bearer. Risk retention groups, as insurers, issue policies to their members and bear risk.
TYPE OF INSURANCE PROVIDED
Risk retention groups can only provide liability insurance. The definition of liability is set forth in the Liability Risk Retention Act and generally means and includes legal liability for damages because of injuries to other persons, damage to property or other damage or loss to such other persons resulting from or arising out of any business, trade, product, services, premises or operations. Common liability coverages for risk retention groups include general liability, errors and omissions, directors and officers, medical malpractice, professional liability, and products liability. The Liability Risk Retention Act does not extend to workers compensation, property insurance, or to personal lines insurance, such as homeowners and personal auto insurance coverage. Additionally, state insurance guaranty funds are not available to members of a risk retention group.