Alternative Risk Transfer (ART) – Why It’s SmART and Looking SmARTer in 2021 and Beyond
Alternative Risk Transfer (ART) describes the marketplace in which nontraditional risk transfer approaches (as compared to commercial insurance) can be arranged. Some of the types of entities and approaches included in this marketplace are captive insurance companies (Captives), pools, trusts, and risk retention groups (RRGs). ART typically includes some form of self-insurance (formal or informal, complete, partial or shared) and enables entities to:
- Retain all or a portion of their risk.
- Retain all or a portion of insurance profits.
- More closely align their risk management program with the risks of the insured(s)
- Tie their insurance costs more closely to their own loss experience.
- Stop subsidizing the poor performance of unrelated risky businesses with their hard-earned premium dollars.
2020 overwhelmingly demonstrated the importance of ART approaches as commercial insurance rarely covered business interruption caused by COVID-19 and civil unrest.
Join CIC Services on May 19th at 2 p.m. EST as CICS’s Randy Sadler dives into these significant takeaways from 2020 and explores how business owners can better prepare themselves for 2021 and the decade ahead.