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The Ultimate Guide to Insurance Risk Purchasing Groups (RPGs)

Updated: Apr 17

While you may have heard of Risk Purchasing Groups or RPGs for short, you may not be familiar with them in practice and may even find them intimidating. In this article, we'll show you how to take advantage of this unique risk structure while managing state guidelines and compliance requirements like a pro, focusing mainly on the non-admitted market, as these RPGs tend to be the most challenging from a compliance standpoint.





  • What is a Risk Purchasing Group?

  • How is a Risk Purchasing Group established?

  • What’s the difference between a Risk Purchasing Group and a Risk Retention Group?

  • What are the benefits of creating an RPG?

  • What are the challenges of operating a Risk Purchasing Group?

  • Do I need a lawyer to set up a Risk Purchasing Group?

  • Who is insured by the Master Policy?

  • What unique reporting and regulatory requirements do I need to be aware of?

  • How do you keep your non-admitted RPG compliant across the states you do business in?

  • Tools for managing RPG compliance and reporting like a pro


What is a Risk Purchasing Group?

Risk Purchasing Groups (RPG) were made possible through the passing of the Federal Liability Risk Retention Act of 1986, with the intent to provide affordable liability insurance to homogeneous groups with similar or related liability risks. This federal law made it possible for businesses, associations, professionals, and municipalities to obtain liability coverage, where it was previously too expensive for most to afford.


How is a Risk Purchasing Group established?

RPGs are tailored to suit the demographic of the homogenous group. For instance, RPGs may be created to insure groups of food truck operators. An RPG could further define itself as a group of food trucks that serve alcohol or maintain their own outdoor seating. Focusing on these finer points can create more uniformity within the group, making the risk easier to define, evaluate, and insure.


Once the Risk Purchase Group is established, it may seek insurance coverage as a single entity. RPGs are issued a Master Policy, and certificates are issued to individual members of the RPG. Individuals covered under a master policy are often referred to as certificate holders or "cert-holders" for short.


What's the difference between a Risk Purchasing Group and a Risk Retention Group?

Both Risk Retention Groups and Risk Purchasing Groups were made allowable by the same federal Act of 1986, but there are critical differences between them. The main difference is that Risk Retention Groups (RRGs) retain and bear the burden of covering claims, while RPGs do not. RPGs purchase outside insurance from an insurance company. RRGs carry the risk of loss themselves and act as their own insurer.


What are the benefits of creating an RPG?

  1. Bargaining Power. First and foremost, the primary advantage of creating an RPG is bargaining power. By creating a 'group' of consumers, the insureds can use their collective purchasing power to petition carriers to create a more custom and favorable insurance policy specific to their industry. Typically this will include unique coverages/exclusions, and of course, better pricing.

  2. Streamline tax filing and reporting. Another benefit of forming an RPG is the ability to streamline tax filing and reporting in many areas of the country. Some states allow you to lump certificate holders into a single filing, thus savings countless hours of reporting time. This time savings is especially advantageous in the excess and surplus lines space, where taxation and reporting requirements are cumbersome and vary from state to state.

  3. Bypass many fee restrictions. Another attractive benefit to the RPG structure is bypassing many of the fee restrictions that states impose since RPGs are regulated at the federal level rather than the state level.


What are the challenges of operating a Risk Purchasing Group?

Many agencies are eager to jump into the RPG space due to the benefits and opportunities. Still, it's essential to keep in mind that forming and operating a Risk Purchase Group can be pretty challenging. High costs of start-up and complex state registration requirements can be barriers to entry, not to mention the ongoing reporting and maintenance costs.


Do I need a lawyer to set up a Risk Purchasing Group?

The easiest and safest way to set up an RPG is to work with a lawyer specializing in RPGs. A good attorney will be able to walk you through the unique requirement for setting up the RPG in your desired state, as each jurisdiction will have its own specific laws governing business and RPG creation.


Ready to write business as an RPG? Not so fast!

Before you can start writing a Master Policy for your new RPG, there are some questions to consider:


  • Who is the insured?

  • What are the unique reporting and regulatory requirements you need to be aware of? Can any of these requirements work to your advantage?

  • How do you keep your RPG in compliance with the state requirements in which you operate?



Who exactly is insured by the Master Policy?

It might sound strange to ask, "Who is the insured?" but, as with most answers to RPG and surplus lines questions, it depends on the state.


For a Risk Purchase Group Master Policy, the insured is usually the RPG as a single entity. If this held for all 50 states, reporting would be a breeze! In these "Master Policy Reporting States," one report covers many individual cert holders in a single filing.


However, this isn't the case for many states. States like California, New York, and Texas, for instance, are considered "Certificate Filing States." These states insist the insured is the individual certificate holder. Therefore, instead of reporting a single Master Policy for the RPG, each respective certificate holder must be reported separately. RPGs can have tens, if not hundreds, of cert-holders, so you can see how this can quickly add up to stacks of paperwork.


Fortunately, most states consider your RPG as a single insured. In these cases, paperwork is minimized, and the process is much simpler. In these "Master Policy Reporting States," the total premium written during a given month would be reported as an endorsement to the Master RPG Policy. This is a much simpler process, which is why many Managing General Agents (MGAs) see the RPG as an efficient mechanism to handle large groups of insureds.


What unique reporting and regulatory requirements do you need to be aware of? Can any of these requirements work to your advantage?

With any standard policy, showing Diligent Efforts or obtaining declinations from the admitted markets grants an insured entry into the Non-Admitted or Surplus Lines market. This same practice also applies to our Master RPG policies.


But there are a few interesting ways the states apply this diligent effort to RPGs. To give an example of how this can work to your advantage, "If" your Master RPG is Domiciled in Illinois and you complete the Diligent Effort requirement there, there is a high possibility that you will not need to complete the Diligent effort in another state that also requires Diligent Efforts to be completed. Many states adhere to reciprocity laws and will accept the Diligent Effort in the Domiciled state of the Master RPG. This is a significant time-saver as your RPG begins to cross into new markets across state lines.


Another advantage to insuring with an RPG is that, in many cases, you can bypass fee restrictions that states have in place. For example, until recently, Florida has a $35 fee cap on fees that an agency would charge on surplus lines policies. Non-admitted RPGs were exempt from this fee restriction but, of course, had other guidelines to adhere to.


While reporting for RPGs may require less paperwork in totality, some particular and unique requirements must be followed to ensure your RPG stays in compliance with state regulatory bodies.


How do you keep your non-admitted RPG compliant across the states you do business in?

Keeping track of each state's rules, rates, deadlines, and fees is a monumental task, and the cost of non-compliance is high. Failure to adhere to the state's strict guidelines can result in steep penalties and fines.


RPG Reports can differ from those required for standard policies, and it's important to be aware of the nuances, especially with regards to policies written in the E&S market. Understanding how to apply Stamping Fees and Surplus Lines taxes is vital when ensuring compliance. Each state has its specific due dates for reporting and filing. In some states, filings are due 30 days from the effective date, while others are due 60 days. States also require additional reporting, sometimes monthly, other times quarterly, or annually.


In the case of RPG filing, you may file the Master Policy with Zero Premium depending on the state. Still, in other states, you wait for the premium to be written in the state, then file your Master policy with the premium attached.



Tools for managing RPG compliance and reporting like a pro

Keeping track of the different compliance requirements, fees, and deadlines for each state can be a daunting task. Thankfully, there are tools to help manage this process, saving your agency time and money and allowing you to focus on what matters most--growing your business.


InsCipher is a cloud-based insurtech solution that simplifies RPG management and surplus lines compliance, filing, and reporting. When we take on an RPG client, a member of our dedicated compliance team will review your RPG Master Policy and explain the particular requirements that your RPG must follow based on the state where the master policy is located. When it comes time to file with the state, those using our online filing portal, InsCipher Connect™, will be directed to submit either the single master policy or, in cases like Texas, you will be prompted to file for each individual certificate holder. Our software takes out much of the guesswork, but of course, our filing experts are on hand to answer any compliance questions you may have.


When policy information is entered into the InsCipher Connect™ platform, our system automatically generates a customized filing and reporting schedule based on your specific data. The system offers tools to help build these reports and to file them to the state electronically. The system recognizes that RPG policies are subject to different reporting schedules and payment dates and creates custom reporting tasks based on that information to ensure these events are not overlooked.


Our convenient batch upload and API options make it easier for you to upload multiple policies, certificates, and associated policy documents at once, saving the pain and hassle of manually submitting each certificate holder's information one by one. No matter how you submit policy information into our portal, each of your submissions will go through our automated compliance checker, ensuring that all necessary documentation and information that the state requires is included for state reporting.


InsCipher's filing portal includes a step-by-step process to calculate the tax fees in all 50 states. It can even account for specific nuances like the Kentucky Municipality tax or the Fire Marshall Taxes in Illinois and Oregon, which are only applied to specific lines of business.


Whether you're actively involved with RPGs or just getting started in the excess and surplus lines industry, it's critical to understand the strict reporting guidelines in the states you plan to do business to protect your agency from costly fees, penalties, or potential loss of license.


InsCipher's filing and compliance teams are experts in reporting both Master RPG policies and standard surplus policies, and we'd love to be your ally to help you stay compliant in these areas. We can even take the worry of insurance license management off your radar as well. We offer a quality and responsive service that allows your agency to focus on growing and writing more business.


InsCipher is an insurtech software solution revolutionizing inefficient insurance processes. Simplify surplus lines compliance, filing, and reporting to save your agency time and money. Want to learn more? Request a free demo today.





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