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...arge losses — by purchasing excess insurance or reinsurance. INSURANCE ...ion Actuarial services Excess or stop-loss insurance/reinsuranc...

... (3 ) minimal exposure to a catastrophic event; and (4 ) high frequency and low severity – meaning that a business should have at least several dozen losses a year, most of less than $50,000. For example, a large hotel or bank would probably experience a number of small Workers Compensation claims, but few large claims. Casualty insurance products (such as Workers Comp, General Liability and Auto Liability) are the best candidates for alternative risk financing. Because Comp and Liability claims tend to ... reserves until losses are fully paid. By using alternative risk financing, a company can invest its funds elsewhere, rather than paying premiums. Insurers have developed a number of colorful terms for what amounts to a handful of alternative risk financing techniques. These methods include: Excess insurance Reinsurance Guaranteed cost Retrospective rating Large deductible Self-insurance  Captive insurance Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get ... Recent All Back Alternative Risk Financing: Size Doesn'T Matter 4/30/2013 10:41:13 PM by CompleteMarkets Editor This content has not been rated yet. ALTERNATIVE RISK FINANCING: SIZE DOESN'T MATTER Most medium-sized and smaller companies protect themselves against their property and liability exposures by purchasing Commercial insurance, while large corporations and government agencies prefer to use some type of alternative risk financing for this purpose. However, businesses of any size can employ this tool to enjoy such benefits as improved cash flow and a lower total cost of ...

...es. These methods include: Excess insurance Reinsurance Guara...

... to a catastrophic loss High frequency and low severity "High frequency and low severity" means that the number of losses should be at least several dozen per year, of which most are less than $50,000. As a case in point, a large hotel would probably experience many small Workers Compensation claims but relatively few, if any, large claims. A bank can also expect to have numerous low severity Comp claims. Alternative risk financing usually involves loss severity — the exposure to large losses — by purchasing excess insurance ... reinsurance. INSURANCE LINES The other question asked most often is "What lines of insurance are best for alternative risk financing?" Casualty lines — Workers Compensation, General Liability (including Products), and Auto Liability — are the best candidates for alternative risk financing. Workers Comp and Liability claims tend to be paid over long time frames, one to five years or more. Insurers of these lines generate substantial investment income on their reserves until losses are fully paid. Mid-size companies using alternative risk financing can earn the investment income on ... yet. ALTERNATIVE RISK FINANCING: NOT JUST FOR FORTUNE 500 COMPANIES by Greg Ryan and James Bukowski Grow revenues and earnings by offering alternative risk financing to selected clients. Large corporations and government agencies generally use some type of alternative risk financing for their property and liability loss exposures. Medium-sized and smaller companies usually buy Commercial insurance for this purpose. However, alternative risk financing is not just for Fortune 500 companies. Many other firms can enjoy some of its benefits, such as improved cash flow and a lower total cost of ...