Benefits of Alternative Risk Transfer
Alternative Risk Transfer
Alternative risk transfer has gained popularity in part because the insured:
• Does not subsidize others whose premiums are inadequate to pay their claims.
• Gains access to profits generated from current insurance premiums.
• Has more control of who shares your risk.
• Is not subject to market swings—gain stability and predictability in premiums
Alternative Risk Transfer, often referred to as ART, means using techniques other than traditional insurance and reinsurance to provide your business with coverage. Alternative risk transfer is typically available to companies with low risk profiles and a dedication to maintaining safe operations, because the insured party assumes a portion of its own risk in exchange for lower premiums or a reduction in net cost of insurance. In many cases, ART gives capital market investors a more direct role in providing protection. Characteristics unique to ART often include:
• Multi-year, multi-line coverage
• Coverage tailored to a special need of an insured
• Coverage not generally available in the marketplace
• Insured retains some risk