Ace the AFP Exam 2026 – Boost Your Financial Wizardry!

A risk retention group is primarily established to provide liability insurance to its members, specifically focusing on areas like product liability risks. These groups allow businesses with common interests to come together to self-insure against certain types of risks. By pooling resources, members can share the financial burden of potential losses. This structure can lead to more affordable premiums and better coverage options, as the risks are managed collectively.

The other options describe different concepts. The first option implies a personal insurance model that doesn't align with the purpose of a risk retention group, which is geared towards businesses rather than individuals. The third option refers to an investment strategy association, which is unrelated to the concept of risk management through collective insurance. Lastly, the fourth option pertains to asset transfer practices, which again are not related to the risk-sharing and liability coverage objectives of a risk retention group.