Risk Retention for Assisted Living

Traditional insurance policies are not appropriate for every situation, and one of the many alternatives is a risk retention group. Essentially, risk retention groups are insurance companies established by a group of businesses or other entities in the same industry, and their role is to provide liability coverage for the owners or institutions involved in the policy. This structure is particularly appealing to assisted living centers. Take a look at the details.

risk retention group assisted living

Benefits of Risk Retention Groups

With a traditional insurance policy, an assisted living center or any other person or entity pays premiums to the insurance company. Then, based on the stipulations in the policy, the insurance company steps in when major losses occur, and typically the insurer covers smaller losses either by covering the deductible or not making a claim. Through this process, the insurance company may earn profits or losses.

In contrast, with risk retention groups, the risk is retained by the insured. In other words, the insured may suffer losses, but at the same time, they can also keep their profits. In light of that, these policies offer the following advantages for nursing homes and assisted living facilities:

  • The chance to retain profits
  • Lower premiums or contribution rates
  • Broader coverage that covers a wider variety of losses than traditional insurance coverage
  • The ability to shape the policy so it meets the unique risks faced by assisted living facilities
  • Loss control and risk management programs
  • Access to reinsurance markets

Additionally, because numerous professionals and entities come together on these policies, they share interests and they can help each other’s operations.


Why Premiums Are Lower

When you opt to participate in a risk retention group, the premiums are lower for a number of reasons. However, the main reason is related to how far these policies look into the future. Generally, traditional insurers look at the potential claims that you are going to make throughout the lifetime of the policy. Then, the insurer tries to recapture those amounts through the insurance premiums it sets. As a result, you may be paying for a potential nursing home negligence claim that may or may not take place far into the future.

On the other hand, a risk retention policy also estimates potential claims over the next 12 months and premiums are calculated based on that. Additionally, risk retention groups don’t have the overhead of traditional insurers. Because you essentially own the insurance company, that also cuts down on your contribution.


Risk Retention Vs. Self Insurance

Risk retention may sound slightly like self-insurance, but it is a completely different entity. It is also a much easier process to manage than wading into the complex world of reinsurance. At Venture Captive, we offer a variety of insurance programs and setups. We help our clients choose the right option for their needs, and we guide them through the process.


To learn more about risk retention groups, contact us today. At Venture Captive, we offer risk retention, captive insurance programs, financial programs, risk management loss control, and other essentials.