With no bias toward commercial vs. alternative risk solutions, we help you choose and deploy the best approach for your particular needs.
For our clients, the world of Alternative Risk encompasses every non-commercial insurance risk financing vehicle whether the approach is simple, such as assuming higher retentions, or complex, such as forming a licensed captive insurance company. These solutions fit every industry and organizations of every size. The question is which is right for you. Alternative risk solutions are tools used by our clients to achieve some of the following goals:
- To improve control over cash-flow
- To minimize purchased insurance expenses
- To better control risk, and
- To accumulate equity or wealth
To do these things well requires an understanding of various program designs, cash flow needs, regulatory requirements, the availability and use of reinsurance, service providers available to meet specific needs and financial reporting and planning.
Examples of alternative approaches
Our experience includes assisting clients with the following alternative risk approaches:
- Increased retention under commercial insurance programs
- Group purchase or affinity insurance programs (including RPGs)
- Self-insurance (both stand-alone and group) programs, such as trusts, pools, or association programs
- Structured reinsurance programs, including loss portfolio transfers (LPTs)
- Risk retention groups (RRGs)
- Licensed captive insurance companies
Your specific perspective
Beyond our independence and objectivity, we bring an understanding of your particular perspective on the use of an alternative risk approach. So, whether you are contemplating a stand-alone, newly formed alternative approach, such as a single-parent captive, or you are evaluating the opportunity to join an existing program, such as a pool or trust, we can use our experience and expertise to answer the questions of how these alternatives work for you. Regardless of whether you want to build a new program, rent someone else’s or join an ongoing group program, we can help you make the right choice for you.
A life-cycle approach
Our client assistance follows the life-cycle of the chosen alternative risk approach. We can help with:
- Feasibility and modeling
- Formation and related implementation services
- Operational services, including ongoing advice, performance measurement, service sourcing and periodic review
So, wherever you might be in the process of alternative risk treatment, we can help with your pressing concerns.
Some sample client engagements
- We have worked with a successful religious sector self-insured group since 1988. Our management consulting lead to changes in corporate and governance structure, expanded coverage offerings for their membership, creation of a single-parent reinsurance captive, and developing considerable risk capacity through their own retention and a profitable reinsurance relationship with their insurer. As a result, the participants built equity through retention and risk assumption.
- We have provided ongoing services to several municipal and school district pools since the late 1980’s. We helped them with strategic planning, feasibility studies, excess insurance and reinsurance procurement, service provider selection, financial modeling and ongoing board development. With the assistance of our claims management practice, we have done claim audits, feasibility studies for in-house claims administration and evaluation of third party administrators.
- We designed and procured a multiple-line, combined retention seven-year alternative risk transfer (ART) program for a public sector utility.
- We worked with a steering committee for a potential logistics and wholesaler group purchase program on identifying appropriate coverages, limits and retentions for their program.
- We have analyzed and recommended against executing several loss portfolio transfer options for commuting a complex Owner Controlled Insurance Program (OCIP) for an infrastructure megaproject. In other settings, we have arranged for LPTs in bankruptcy situations, to clean up liabilities during mergers, and to close out other large loss sensitive casualty rating plans.
- We have performed feasibility studies, formed single-parent captives and consulted to the captive board for organizations in a variety of industries.
- We have consulted to several coverage specific, usually workers’ compensation, self-insured groups, providing ongoing strategic planning, risk financing, risk control and board development expertise.
- We have evaluated many offerings presented to clients involving existing group programs, including protected cell captives, public sector pools, association programs and self-insured groups. Knowing first hand how these groups typically operate and having the expertise to understand their specific models helps flatten our clients’ learning curve.
- Within our healthcare practice, we have evaluated existing professional liability group captives and the feasibility of forming both single parent and group captives for hospitals, physicians and related providers. For healthcare clients in existing captives, we have reviewed captive financials and operational results for the owners.
- We assisted a client in forming a licensed insurance (not a captive) company. This followed our feasibility work on a captive insurance company approach.
As you can see, we have assisted organizations in many different industries with both for-profit and not-for profit orientations.
Some specific Captive Insurer service offerings
While the following services are discussed in the captive insurer context, similar approaches are applicable to group, programs, self-insured trusts, and similar vehicles.
Pre-feasibility. Our prefeasibility work is focused on educating your decision makers on how a captive might work for your organization, what value you might derive from forming a captive, what the process entails and guidance on potential service providers.
Feasibility. In the feasibility phase, we collaborate with other chosen professionals to answer two important questions: (i) “Do we need a captive, and if not, what do we need?” (ii) “If we don’t need a captive, are there other compelling reasons for forming (or joining) one?”
Formation. When clients decide to form a captive we provide full post-feasibility (implementation) services. These include:
- Review and oversight of broker-related excess insurance placement and fronting insurer activities
- Assistance with administration
- Identifying and hiring domicile service providers
- Guidance through the domicile application process, including business plan development and domicile meetings, introductions to the domicile’s captive regulatory officials
Operations. Once the captive is formed, we consult on board, committee, and policy decisions – e.g., underwriting protocols, and premium and equity allocations, performance evaluation, strategy, and coordination of providers. The scope of these services is tailored to the client’s specific needs and can be either (i) on-going management or board consulting or (ii) ad hoc engagements on specific topics.
In each of these areas, we work with a captive’s actuaries, accountants, attorneys, investment advisors, tax specialists, insurance and reinsurance brokers, third party administrators (TPAs), captive managers and auditors to assure that the captive is meeting its goals and objectives.