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A Risk Retention Group (RRG) is defined as a group of members—typically businesses or individuals—who come together to pool their resources and share risks associated with liability insurance. A unique characteristic of RRGs is that they are allowed to be licensed in one state and can provide insurance to their members located in other states, without needing to seek separate licenses in each of those states. This is particularly beneficial for organizations with a nationwide presence.

The ability to operate across state lines while being licensed in only one state is a significant advantage, as it allows for greater flexibility and efficiency in providing insurance coverages tailored to the specific needs of its members. This is why the correct answer highlights that RRGs can insure members in any state while licensed in just one.

In contrast, while Risk Retention Groups may serve local members, many are created to serve organizations with members in multiple states, which goes against the idea that they only serve local members. Regarding the requirement for licensing, RRGs do not need to be licensed in every state, as mentioned earlier. Moreover, although RRGs can be for-profit entities, there are not exclusively or predominantly profit-driven; they can also be formed as non-profit organizations to meet their members' insurance