Alternative Risk Transfer Solutions

The insurance market continues to be challenging, marked by persistent pricing increases and diminishing capacity for certain industries or risks that may not align with insurers’ current underwriting appetite. Climate change and more frequent extreme weather events have also disrupted the insurance market in recent years, making it more expensive and/or difficult for organisations to obtain appropriate insurance cover against natural catastrophe (“nat cat”) perils.

As the cost of insurance rises, retention levels grow and cover becomes more restrictive, organisations are being more proactive in exploring alternative ways to manage, finance and transfer risks outside of the realms and restrictions of traditional insurance. No longer confined to the terms and conditions attached to traditional insurance, organisations are able to find ways of transferring and financing risks that may not have been traditionally insurable.

What are Alternative Risk Transfer (ART) solutions?

Alternative Risk Transfer (ART) solutions are essentially substitute risk management and finance strategies to the traditional direct insurance marketplace. ART is a re-classed, repackaged approach to addressing some of the key issues and challenges faced by traditional insurance placements.

Together, Marsh Advisory and ART solutions help organisations improve outcomes and maximise control.

Three key motivators driving organisations to explore ART solutions:

1. Cost efficiency: ART solutions can cost less over time than what the traditional insurance market would offer on a like-for-like basis.
2. Supplementing traditional insurance: ART solutions create alternative access points for additional or new capacity and /or higher limits previously not available.
3. Bridging the protection gap: ART solutions create opportunity and possibility for exploring protection options for previously uninsurable risks.