DECA Financial Consulting Complete Practice Exam

Risk retention groups primarily focus on providing liability insurance coverage. The main purpose of these groups is to allow members who share similar risks to pool their resources and manage their liability exposure more effectively. This structure enables businesses or organizations that would otherwise face challenges acquiring adequate liability coverage in the commercial market to obtain it more easily and affordably.

Liability insurance covers a range of potential legal responsibilities that businesses face, such as claims resulting from accidents, injuries, or negligence. Risk retention groups offer this type of insurance specifically because it aligns with their goal of shielding members from the significant costs associated with litigation and claims, which can be especially burdensome in certain industries.

Other types of insurance like property, health, and life generally do not fall under the purview of risk retention groups, primarily due to regulatory restrictions or the need for much broader risk diversification, which these groups are designed to cater less to.