Which of the following best describes risk retention groups?

Risk retention groups are unique entities designed to provide liability coverage, specifically for their members who share similar risks. They are formed under the federal Liability Risk Retention Act of 1986, allowing groups of businesses to join together to pool their resources to manage and retain risk more effectively.

The correct answer highlights that risk retention groups are focused on covering liability risks, which aligns with their fundamental purpose. These groups typically consist of members from similar industries who face comparable risk exposures, allowing them to share the costs of insurance and losses. This collective approach to risk management enables members to access coverage that might otherwise be difficult or expensive to obtain in the conventional insurance market.

Other options do not accurately represent the nature of risk retention groups. For instance, the notion that they provide workers' compensation exclusively is misleading, as their primary function revolves around liability coverage rather than worker-centric insurance products. The idea that they are owned by a single entity is inaccurate too; risk retention groups are cooperative ventures among multiple members, not solely controlled by one business. Lastly, the claim that they only cover personal property risks contradicts their core focus on liability coverage, which is distinct from property itself. Thus, the emphasis on liability risks is what makes the correct choice stand out as the accurate description