RRG Compliance

A Risk Retention Group (RRG) is a special form of captive insurance company authorized under the federal Liability Risk Retention Act (LRRA) of 1986. RRGs may write liability coverage for their member-owners on a nationwide basis after chartering in a single domicile state, without needing a separate license in each state where they write coverage.

This makes RRGs a powerful vehicle for industry associations, professional groups, and trade organizations that want to provide liability coverage to their members across all 50 states.

LRRA — The Federal Framework

The Liability Risk Retention Act preempts most state insurance regulation for qualifying RRGs. Key provisions:

An RRG that qualifies and is licensed in one domicile state may write liability coverage in all 50 states and DC.
RRGs may only write liability lines — NOT property, workers’ compensation, or life/health.
All members must be insureds (no non-member insureds).
Members must share a common business, trade, product, services, premises, or operations.
The domicile state is the primary regulator. Other states can only require registration, not independent licensing.

Domicile Requirements for RRGs

Most RRGs domicile in Vermont, South Carolina, Hawaii, or Delaware. Vermont is the most popular US RRG domicile with specific RRG enabling legislation.

Vermont RRG Formation Requirements

Minimum capital: $500,000 (higher than pure captives)
Must demonstrate that all charter members share a common risk
Business plan with 5-year actuarial projections
Actuarial feasibility study signed by a qualified actuary
Application to Vermont DFR with list of charter members
NAIC biographical affidavits for all directors and officers

NAIC Filing Requirements

RRGs file financial statements with the NAIC on a quarterly and annual basis. These filings use the NAIC’s standard financial statement blanks.

Quarterly Statement (Yellow Book)

Due dates:

Q1: May 15
Q2: August 15
Q3: November 15
Annual: March 1

Required schedules:

Schedule	Description
Assets	Statement of admitted assets, non-admitted assets, and total assets
Liabilities	Loss reserves, unearned premium reserve, other liabilities
Capital & Surplus	Changes in surplus during the period
Income	Premiums earned, losses incurred, expenses
Schedule F	Assumed and ceded reinsurance
Schedule P	Historical loss development data
Schedule Y	Information of holding company group
Exhibit of Premiums and Losses	By state (RRGs must report by risk state)

OpenInsure generates data for each of these schedules from the policy, claims, and billing databases.

Annual Statement — Additional Requirements

The annual statement includes all quarterly schedules plus:

Management’s Discussion & Analysis — narrative review of financial condition
Actuarial Opinion — signed by a qualified actuary
Audit Report — by a licensed CPA
Notes to Financial Statements

POST /v1/compliance/:orgId/naic-statement
Authorization: Bearer <admin_token>
Content-Type: application/json

{
  "period": "2025-Q1",
  "statementType": "QUARTERLY",
  "format": "NAIC_XML"   // or 'PDF' for human-readable
}

Schedule F — Reinsurance Reporting

Schedule F is the NAIC’s detailed reinsurance schedule. It reports every reinsurance transaction, the reinsurer identity, and whether credit for reinsurance is taken in the financial statements.

Part 1 — Reinsurance Assumed

Lists all business assumed from other insurers (uncommon for typical RRGs).

Part 2 — Reinsurance Ceded

Lists all business ceded to reinsurers:

Column	Description
Reinsurer Name	Legal name of reinsurer
NAIC Code	Reinsurer’s NAIC company code
Domicile State	State of domicile
Authorized/Unauthorized	Whether reinsurer is admitted in the domicile state
Ceded Premium	Premium ceded during the period
Ceded Losses Paid	Losses recovered from reinsurer
Ceded Reserves	Estimated future recoveries
Funds Held	Premiums withheld as security
Letters of Credit	LOC posted by reinsurer

OpenInsure generates Schedule F data from the @openinsure/reinsurance treaty records:

GET /v1/compliance/:orgId/schedule-f?period=2025-annual

# Returns structured JSON conforming to NAIC Schedule F specifications

Reciprocal State Registration

Although an RRG doesn’t need a full license in non-domicile states, it must register before conducting business there. OpenInsure tracks registration status for every state.

Registration Process

For each non-domicile state where the RRG plans to write coverage:

File a Notice of Intent to Do Business with the state insurance department (usually a 30-day advance notice).
Submit: certificate of insurance, domicile license, articles of incorporation, most recent annual statement.
Pay state registration fee (varies by state, typically $250–$1,000).
Comply with state surplus lines tax and stamping office requirements.

GET /v1/compliance/:orgId/state-registrations

# Response:
{
  "domicile": "VT",
  "registrations": [
    { "state": "CA", "status": "active", "registeredDate": "2022-03-15", "expirationDate": null },
    { "state": "NY", "status": "active", "registeredDate": "2022-04-01", "expirationDate": null },
    { "state": "TX", "status": "pending", "filedDate": "2025-06-01", "estimatedApproval": "2025-07-01" },
    { "state": "FL", "status": "not_registered", "firstPolicySold": null }
  ]
}

Surplus Lines Tax Calculation

In non-domicile states, RRG premiums are subject to surplus lines tax. OpenInsure’s @openinsure/compliance package maintains the current surplus lines tax rate for all 50 states:

State	SL Tax Rate	SLSF Fee	Notes
California	3.00%	None	CATAX filing via LASLI
New York	3.60%	None	Filing via ELANY
Texas	4.85%	None	Filing via TSLA
Florida	5.00%	None	Filing via FSLSO
All others	Varies	Varies	See compliance engine

Taxes are calculated at bind time and included in the policy fee breakdown. The compliance engine generates monthly surplus lines tax returns for each state where the RRG has written business.

Annual NAIC Filing Checklist

OpenInsure generates a compliance checklist for RRGs at the start of each calendar year:

GET /v1/compliance/:orgId/annual-checklist?year=2025

# Returns all required filings with due dates, status, and responsible party

Filing	Due Date	Status
Q4 Quarterly Statement	March 1	✅ Filed Feb 14
Annual Actuarial Opinion	March 1	✅ Filed Feb 28
Audited Financials	June 1	🟡 In progress
Premium Tax Returns (domicile)	March 1	✅ Filed Feb 14
SL Tax Returns (CA, NY, TX…)	Monthly	🟡 May return due June 20
State Registration Renewals	Various	🔴 MA renewal due July 15
NAIC Company Profile Update	Annual	✅ Filed Jan 30