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Alternative Risk Transfer Management

Alternative Risk Transfer (ART) works outside of the traditional model of commercial insurance and reinsurance to provide companies with coverage and protection. The ART market includes high deductible programs and captive insurance including single parent, group and segregated cell structures.

Through comprehensive valuation and analysis, our team of experts quantify the advantages of an ART structure for your organization, identify issues and provide custom solutions. We take pride in creating the right insurance product to cover your special and unique requirements.

Captive Insurance Companies

Captive insurance companies are a time proven alternative risk finance solution. Large multi-national companies have benefitted from the use of captives for over 40 years. Medium and small companies can see the same benefits with the proper advice and planning. The flexibility and innovation in solutions offered by captives and the growing number of domiciles available, is expanding the captive market for Canadian companies of all sizes, especially those looking to accelerate corporate risk management objectives. A captive insurance company typically insures risks of its parent and affiliated subsidiaries. A captive can also insure risks of third parties.

Captives are designed to enhance a company’s ability to manage it’s retentions and deductibles that come with traditional risk transfer programs. By forming its own subsidiary insurer, a captive, to handle select risks, a company is partially freed from the control and restrictions of the commercial insurance market. In addition, a captive can introduce structure and protect the company’s balance sheet while maintaining flexibility in program design and providing potential savings. There is flexibility to fund not only traditional coverages—such as general liability, workers compensation, auto liability, property insurance, employee benefits—but also difficult-to-insure exposures—such as surety, directors & officers, cyber, environmental risks, and employment practice liabilities.

Rationale for Captives

Canadian companies are facing an abundance of opportunities and challenges in the always-changing risk landscape. Companies that understand the value of captives are typically motivated by the following common reasons:

Hard market: A captive can alleviate market pressures, capture potential underwriting profit for expensive insurance placements, and provide access to reinsurance to fill capacity.

Differing risk appetites: Captives can help in balancing the varying risk appetites of corporate and subsidiaries through deductible buy-downs and reducing volatility for the units.

Multinational operations: Captives can potentially generate tax efficiencies on non-Canadian premiums and tax deferral on Canadian premiums.

Third-party risks: Companies can create a new revenue stream through the use captives to (re)insure third-party risks such as franchise operations, contractors, and extended warranties.

Cash flow: Captive can improve cash flows and investment returns.

Risk management: Captive can embed a proactive risk and claims management framework.