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Historically, insurers have not been generous in terms of reducing premium
in exchange for higher levels of self-insurance. There is no tangible
incentive for universities to increase levels of retained risk and insurers
continue to pay claims for relatively low values. This means that premium
has to be maintained at a level to meet these losses.
Currently, there is a wide variation in practice, with many institutions
opting for low deductibles (typically £1,000 for property losses) while
others have decided they can manage relatively large deductibles from
revenue, up to six figures in some cases.
There are several options available to you, including:
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Increasing the level of deductible in a conventional insurance programme
·
Not insuring at all
·
Creating a
Captive Insurance Company
·
Renting a part of a Captive or creating a
Protected Cell Company
We adopt a 4-stage approach:
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1 |
Claims Analysis which includes:
·
Collating all past claims and analysing
data by year/type/cost
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Calculating average claims cost by
year/type
·
Assessing the impact of various individual
and aggregate deductibles |
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2 |
Insurance Market Exercise
It is important to have a benchmark against which costing for
retained losses and risk transfer can be measured. We will obtain
indications of cost from current and other insurers. |
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3 |
Risk Retention Analysis
Complete an assessment of your latest Annual Financial Report to
judge your capacity to retain risk and propose an appropriate loss
tolerance limit. This will be a conservative estimate of your
ability to retain risk and we will compare and analyse against
current levels of self-insurance.
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4 |
Analysis
·
Consider the viability of a retained risk
strategy and, if appropriate, recommend a full Captive
Feasibility Study
· Advise you on an insurance programme based
on the results of the insurance market exercise
·
Give an indication of likely capital
requirements and PCC premium |
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