Life & Health Insurance Practice Exam 2025 – Your All-in-One Guide to Exam Success!

A group-owned liability insurer that spreads commercial liability risks among its members is known as a Risk Retention Group. This type of insurer is formed by businesses within the same industry to collectively manage their liability risks. Members pool their resources to provide coverage for certain types of liabilities, thereby spreading the risk among themselves. This arrangement allows businesses to have more control over their insurance costs and coverage terms since they are essentially self-insuring their risks while gaining the benefits of a larger pool.

Risk Retention Groups are particularly advantageous for members who face similar liability risks, as they can tailor their insurance solutions based on their specific needs and the collective experience of the group. They are regulated under the Liability Risk Retention Act of 1986, which provides a framework within which these groups can operate effectively, ensuring they meet necessary legal and financial standards.

Other options, such as Stock Insurance Company, Reinsurer, and Reciprocal Insurer, refer to different types of insurance entities. A Stock Insurance Company is owned by shareholders and primarily focuses on profit, while a Reinsurer provides insurance to insurance companies to manage their risk. A Reciprocal Insurer consists of a group of individuals or organizations that provide insurance to one another under a mutual agreement but does not specifically focus on