Far too often insurance is placed by brokers on behalf of clients without understanding their risk profile, appetite and tolerance capability. We take time to design and implement the most appropriate optimum risk financing solution for our clients. We recognise the procurement of insurance is essential for many companies but it is important to ensure insurance delivers value for money and does not unnecessarily erode working capital if not required.
We assess and agree the most appropriate risk transfer strategy for a client. This broadly falls into three categories of risk transfer:
Conventional Insurance Placement
There may be a number of reasons for a client to procure conventional insurance, which can be expressed as the procurement of premiums often up the full exposure limit with minimal excess/deductible levels if any. This may be because they want full protection, take advantage of insurance soft market conditions or do not wish to unduly expose their balance sheet.
Non-Conventional Insurance Placement
With non-conventional programmes, our clients retain more risk and transfer less through insurance. Often deductible levels will be considerably higher and there is an element of self-funding. For certain classes the client may operate escrow funds for the broker/insurer to settle claims on their behalf. Clients who adopt Non-Conventional programmes understand the benefits and consequences of greater risk retention and will manage some risks through risk management processes.
Alternative Risk Financing
This builds on the principles of non-conventional programmes, for sophisticated businesses with strong risk tolerance capabilities and risk appetite. Some clients form their own insurance company subsidiaries to finance their retained losses in a formal structure.
Clients achieve this through the formation of a wholly owned Captive Insurance Company or participate in an existing Captive called a Protected Cell Company (PCC). Captives can be situated in a variety of different offshore locations depending on the requirements and benefits they receive. There is a cost to setting up a Captive with ongoing management charges. Also, claims handling processes need to be established through TPAs and LOCs are often required.
The team at Colmore Insurance has experience in all three categories of risk transfer and can discuss the most appropriate strategy with you.