Alternate Risk Transfers – Insurance Strategies

Alternate Risk Transfer is a fancy way of saying alternate methods of insurance & risk management, of which there are many. From the most basic alternative of going without insurance (self-insuring) to so-called “program business captives”, there are a wide variety of strategies from which to choose.To understand why ART strategies are so popular it is important to understand a few facts about insurance pricing.Insurance Premiums are related primarily to economic cycles NOT primarily to claims.”The claims that recent increases in medical malpractice liability insurance premiums in Connecticut are attributable to overly generous jury verdicts are unfounded. The more likely explanation for the sudden rise in rates is the decrease in investment earnings of the medical malpractice insurers…

” Professor Tom Baker, Director, Insurance Law Center, University of Connecticut School of LawEvery time insurance industry profits decline sharply, the industry declares an “insurance crisis” – rates go up sharply, deductibles rise & underwriting guidelines tighten.Insurance Premiums have risen much faster than claims.Median medical malpractice payments rose 35 Percent from 1997 to 2001 (an average of 8.5% a year).Average premiums for single health insurance coverage increased 39 percent over that time period (9.5% per year). (Source: National Practitioner Database)A small number of insured may be responsible for a large percentage of losses.National Practitioners Database:For example, in Florida, 6% of the doctors were found to be responsible for 51% of the malpractice claims. 2,674 out of 44,747 doctors have paid two or more malpractice payments. These doctors are responsible for 51% of total malpractice payments.24 Florida physicians have paid 10 or more malpractice settlements since 1990.Article Source: http://EzineArticles.com/50594

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