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Federal Liability Risk Retention Act

The Federal Liability Risk Retention Act, enacted by Congress in 1986, was an expansion of the Product Liability Risk Retention Act of 1981 and addressed availability needs of commercial liability insurance in the market in 1980s.

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The Act utilizes both risk retention groups (RRGs) and purchasing groups (PGs) to accomplish its purpose. Also of note is that the Act preempts some state functions. For example, the Act does not allow a state insurance regulator to prohibit RRGs domiciled in other states from operating within the regulator's state, thus eliminating the need for a fronting company.