Alternative risk transfer

The alternative risk transfer (abbreviation ART, English "alternative risk transfer " ) is one of the three types of reinsurance in addition to financial reinsurance ( balance protective coverings ) and the (after Liebwein ) "traditional" reinsurance ( for example, XL, Quota Share, etc.).

As an alternative risk transfer is called the principle of risk financing through non-traditional coverings of risk carrier ( insurer or reinsurer ).

There are three basic forms of ART:

• Self- insurer, or (from the English ) " Captives " These are company-owned insurer, which were only established to carry proprietary risks. Self- insurers can come up directly to the reinsurer to buy- reinsurance protection.

• "Finite Solutions": These are bank-like products that replace the protection provided by conventional ("classical " ) reinsurance or financial reinsurance. This is mostly to contractual arrangements, and the Ansparverträgen are relatively similar. For the definitions of reinsurance from the banking business following rule is used: the probability of a loss in the amount of 10% of the sum insured shall be 10 %.

• Risk securitization (English "insurance linked securities " ): These are capital market securitization of risks. The reinsurers operate here mostly as frontman of certain risks to the capital market, or buy about a retrocession. In this regard, there are a number of capital market game species, such as swaps, bonds, option or other solutions. After Liebwein only about 4 % of the capital market volume will be required to pay all insured risks.