The alternative risk transfer or ART market continues to influence a larger share of the overall insurance market. In the past, self-insurance, captive insurance and other ART programs have been traditionally associated with hard to place or unique exposures. With its wider acceptance, it can be argued the ART market has become the norm rather than the exception as many organizations, either individually or collectively, incorporate some form of risk retention into their risk management strategies.

Why is this trend occurring? In short, it is about companies and public entities working to gain more control of their total cost of risk and not being at the mercy of the insurance marketplace. In a very real sense, the ART market provides a more efficient and streamlined model for companies and entities willing to take ownership in the management of risk.

Insurance Business Cycle Drives the Alternative Market

ART programs typically gain market share during hard market cycles of the insurance industry characterized by rising premiums, tougher underwriting practices and more restrictive coverage. Employers who make the move to the alternative market are often reluctant to return to traditional markets once they realize the benefits of the ART market approach. Hence, the ongoing growth and development of the ART market in the past thirty years through several insurance business cycles.

Client Retention

Effectively managed Third Party Administrator (TPA) programs address common complaints employers voice relative to traditional insurance. One of the most significant complaints employers point out is lack of control relative to the cost of claims and the fluctuation in premium from year to year.

From the outset, the ART model is more collaborative since the employer essentially becomes an owner of the risk and stakeholder in the processes and methods that are employed to manage claims and associated costs.  TPA programs work very closely with employers to ensure that risk management becomes an integral part of a company’s operations.  This joint effort also engenders close communications between the employer and TPA.

When an event does occur, the claim is handled with greater transparency, consistent communication and more accountability. This level of involvement can influence and change the dynamics as to how employers view and manage risk leading to safer work environments, containment of escalating claims costs and overall better outcomes.  Employers that are accustomed to this level of interaction in the claims process are typically reluctant to return to traditional insurance practices.

Brentwood Services continues to be a leader in structuring and managing all aspects of alternative market programs.