Understanding Alternative Risk Transfer

Joel Geddes III, CWCA, AFIS

Alternative Risk Transfer, often referred to as ART, means using techniques other than traditional insurance and reinsurance to provide your business with coverage. Alternative risk transfer is typically available to companies with low risk profiles and a dedication to maintaining safe operations, because the insured party assumes a portion of its own risk in exchange for lower premiums or a reduction in net cost of insurance.

Risk-financing vehicles used in ART can take on several different forms, with varying degrees of risk. As a strategic enterprise risk management process, ART can blend traditional insurance and reinsurance with forms of self-funding...