Alternative Risk Transfer

Alternative Risk Transfer

Approximately 40% of the total cost of risk of North American organizations is now handled by the alternative markets - captives, reciprocals and high retention programs. In addition finite risk programs can take the timing risk out of significant funded retention.

An increasingly important part of our service to our clients relates to advice on risk financing alternatives.

There is a growing recognition that full guaranteed cost insurance is often an expensive way to finance risks. Many large groups are capable of retaining significant amounts of risk themselves, concentrating external premium expenditure on catastrophe exposures.

Our services are designed to advise not only how much risk should be retained, but also on how this retained risk should be financed. Willis' services include the planning, establishment, development and management of captives for our domestic and multinational clients. If a captive solution is to be considered, our normal procedure is to prepare a feasibility study, following initial discussions with the client.

If a captive is not recommended, we will advise on other methods of self-insurance and loss financing which may be more appropriate to the specific situation.

We are also involved in creative new uses of the captive vehicle. Originally captives were utilized almost exclusively for corporate risks - we have pioneered the use of captives in such areas as creditor programs, extended warranties, and for association programs.

Our services are provided by a dedicated Alternative Risk Financing team in Canada backed by our CAPS (Captive, Actuarial and Pooling Services) practice with specialists in North America, Europe and all major captive domiciles.