The Federal Risk Retention Act of 1986 applies to which type of business?

The Federal Risk Retention Act of 1986 is designed to provide a framework for the formation and operation of risk retention groups, which are essentially groups of businesses that come together to self-insure against specific risks. This act enables these groups to collectively pool their resources and share their risks, making it particularly beneficial for businesses that are engaged in similar activities with common exposure to risk.

Self-insuring businesses are essentially taking on their own risks instead of transferring them to a traditional insurance carrier. The act facilitates this by allowing them to form risk retention groups to help manage these risks more effectively. This not only helps reduce the cost of insurance for these businesses but also increases their control over risk management.

In contrast, re-insurers, credit life insurance companies, and high-risk business insurers operate under different regulatory frameworks and have distinct needs and risk profiles that do not align with the self-insurance model endorsed by the Federal Risk Retention Act.