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, other risk financing structures, such as catastrophe bonds, catastrophe indices, finite risk programs, can mitigate certain risk elements out of significant funded retentions.
An increasingly important part of our service to our clients relates to advice on risk financing alternatives.
There is an increasing appreciation that guaranteed cost insurance is often one of a plethora of options available 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 could be retained, but also on how this retained risk could 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 the preferred strategy, Willis can advise on other methods of self-insurance and loss financing which may be more appropriate to the specific situation.
We also advise on creative uses of captive insurance vehicles. 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 association programs.
Our services are provided by a dedicated Alternative Risk Financing team in Canada backed by our international practices with specialists in North America, Europe and all major captive domiciles. To learn more about our Captive capabilities, please click here.
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