Alternative risk transfer
The alternative risk transfer (abbreviation ART, English "alternative risk transfer" ) is one of the three types of reinsurance in addition to the financial reinsurance (balance sheet protection covers) and (after Liebwein) "classic" reinsurance (eg XL, Quota Share, etc.).
Alternative risk transfer is basically the financing of risk through non-traditional covers of the risk carriers ( insurers or reinsurers ).
There are three basic forms of ART:
- Self -insurers or (from English) "Captives": These are company-owned insurers that were only set up to bear company-internal risks. Self-insurers can approach the reinsurers directly to buy reinsurance protection.
- “ Finite Solutions ”: These are bank-like products that replace protection by conventional (“classic”) reinsurance or financial reinsurance. These are mostly contracts that are relatively similar to savings contracts. The following rule of thumb is used to distinguish reinsurance from banking: The probability of a loss of 10% of the sum insured must be 10%.
- Risk securitisations (English " insurance linked securities "): These are capital market securitizations of risks. The reinsurers mostly act as fronters of certain risks on the capital market, or buy retrocession cover through it. In this regard, there are various types of capital market, such as swaps, bonds, option solutions or others. According to Liebwein, only around 4% of the capital market volume is required to bear all of the insured risks.
literature
- Peter Liebwein: Classic and modern forms of reinsurance . VVW, Karlsruhe 2009, ISBN 978-3-89952-455-0 .
- Various publications by Swiss Re ( http://www.swissre.com ) and Munich Re ( http://www.munichre.com )