Get Alternative Risk Transfer Solutions

This includes experience rating, dividend plans, retrospective rating, deductible plans, self-insurance, pooling arrangements, risk retention groups, captive insurance, fronting, reinsurance, and even risk securitization.

Common strategies include: Loss-sensitive insurance plans, in which your premiums are based on your losses. Risk-purchasing groups of individuals purchasing liability insurance. Self-insured retention plans.

Alternative risk financing facilities are private insurers that offer coverage for a closed group of customers with similar needs. Alternative risk financing facilities may be used to insure against a broad range of risks including medical malpractice, workers' compensation, and officers' liability.

The alternative risk transfer (ART) market is a portion of the insurance market that allows companies to purchase coverage and transfer risk without having to use traditional commercial insurance.

The main areas of alternative risk transfer include risk securitization through catastrophe bonds, insurance-linked securities and reinsurance sidecars, trading of risk through industry loss warranties and weather derivative contracts and transforming capital market risks into reinsurance through transformer vehicles.

Those risk financing methods include: (1) insurance; (2) self-insurance; (3) mutual insurance; (4) finite risk contracts; and (5) capital markets. Below is a discussion of each. Most organizations recognize insurance as a risk financing method to manage risks.

What Is Risk Transfer? Risk transfer is a risk management and control strategy that involves the contractual shifting of a pure risk from one party to another. One example is the purchase of an insurance policy, by which a specified risk of loss is passed from the policyholder to the insurer.

Popular forms of alternative risk solutions include Self-Insurance, Risk Retention Groups, Insurance Pools, and risk transfer from owned subsidiary companies to the parent company.