Which statement best describes a Risk Retention Group?

A Risk Retention Group is defined as a special type of insurance company formed under the Liability Risk Retention Act of 1986, where policyholders share both the risks and the benefits of the insurance coverage. This model allows members, who are typically businesses or professionals with similar risk profiles, to pool their resources to cover liabilities.

In this type of organization, policyholders indeed have a vested interest in the operations and profitability of the group, making them effectively both policyholders and stockholders. This structure helps lower insurance costs for the members by eliminating the profit margin that a traditional insurance company would include.

The other options do not accurately represent the characteristics of a Risk Retention Group. For instance, while A discusses life insurance specifically, a Risk Retention Group can cover various types of liability insurance and is not limited to life products. Similarly, C misleadingly suggests that these groups only insure high-risk individuals, while they can cover a broad spectrum of risks depending on the chosen membership criteria. Lastly, D describes a non-profit organization, which does not align with the nature of Risk Retention Groups that can operate for profit, focusing instead on mutual interests shared by the members.