What Is Risk Retention

Risk Retention — planned acceptance of losses by deductibles, deliberate noninsurance, and loss-sensitive plans where some, but not all, risk is consciously retained rather than transferred.

What is the advantage of risk retention?

As insurance companies owned by their members, some of the key advantages offered by Risk Retention Groups to their members include: Retained profits by members/policyholders. Lower rates. Broader coverage than what is available in the regular insurance market.

When should you use risk retention?

Organizations make decisions to retain risk when a cost analysis review shows that it is cost effective to handle the risk internally as opposed to the cost of fully or partially insuring against it. Companies choose to retain risk when the premium of transferring them is substantially high.