Alternative risk financing tools can potentially save your business money. These types
of plans are negotiable with your insurance carrier and can be customized to fit your organization's goals and objectives.
Retrospective Rating Plans (Retros)
Also known as Loss Sensitive Plans, Retros allow for the premium to be adjusted “retroactively” depending on your losses, subject to the plan’s minimum and maximum premiums. The plan is a mathematical formula with all plans sharing five similar components:
- Your losses, which are typically capped at a specific amount
- Claims handling expense to handle those losses
- The insurer’s administrative and overhead costs
- Excess premium which is the “risk sharing” component of the plan
- An amount to pay state premium taxes
Large Deductible Plans
Large Deductible Plans are similar to Retros and have the same basic plan components, including minimums and maximums. The differences:
- You reimburse the insurer for claims within the selected deductible, so Large Deductible Plans usually have greater cash flow benefits than Retros.
- There is no premium tax charged for losses within the deductible.
- Collateral is required to secure the losses which are yet to be paid, usually a letter of credit.
- There are minimal adjustments.
- There is potential to improve your cash flow because you don’t pay for the losses until the insurance company does.
Generally, Group Captives are formed by two or more companies to provide workers’ compensation and other coverages to their member owners.
With Group Captive plans, each member is an owner, so they have more influence over their program. Because of this influence, Captive costs are transparent to the insurance buyer.
A Captive also provides stability of future insurance costs for members who are willing to control their losses.
An actuarial assessment is critical
An actuarial assessment is important in understanding if alternative risk financing makes sense for your business.
OSHA COVID-19 Vaccination and Testing ETS Toolkit
At Johnson Financial Group, our team continues to monitor the ongoing situation related to the Occupational Safety and Health Administration (OSHA) emergency temporary standard (ETS).READ MORE about how our team continues to monitor the ongoing situation related to the Occupational Safety and Health Administration (OSHA) emergency temporary standard (ETS).
Alternative Risk Financing: 3 Essential Considerations
Retro plans, large deductibles and captives: potential cost savings to your current planDOWNLOAD WHITEPAPER Click here to download our whitepaper on three essential considerations of alternative risk financing.
Alternative Risk Financing: Options to Traditional Insurance
Take a deeper look into the alternative risk financing tools that could potentially save your company money compared to traditional insurance programs.DOWNLOAD WHITEPAPER Click here to download our whitepaper on the alternative risk financing tools that could potentially help save your company money.
Alternative Risk Financing: An Actuarial Assessment is Critical
An actuarial assessment is important tool to help determine if alternative risk financing makes sense for your company.DOWNLOAD WHITEPAPER Click here to download our whitepaper on why an actuarial assessment is an important tool when considering alternative risk financing options.
Your Alternative Risk Financing Advisor
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