FINITE RISK INSURANCE AS A FORM OF ALTERNATIVE RISK TRANSFER

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Abstract

The concept alternative risk transfer relates to the point where insurance, banking and/or the capital market converge in an attempt to efficiently provide enterprises with sufficient financial capacity for protection against a variety of risks. No single all-embracing definition of the concept exists, as these products are tailor-made to the needs of each client. Finite risk insurance represents a category of alternative risk transfer products. Key features and objectives of finite risk insurance receive due attention, after which the focus shifts to the variants and types of contracts concerned. Loss Portfolio Transfers, Adverse Development Coverage, Spread Loss Coverage and Finite Quota Share Reinsurance are identified as the main types of finite risk insurance. The linking of the financial needs of enterprises and insurers to particular finite risk insurance solutions are illustrated in the next two sections. The closing section of this research paper focuses on future prospects of finite risk insurance.

Keywords: Adverse Development Coverage, Alternative Risk Transfer, Finite Quota Share Reinsurance, Finite Risk Insurance, Loss Portfolio Transfer, Spread Loss Coverage

How to cite this paper: Mostert, J. H., & Mostert, F. J. (2008). Finite risk insurance as a form of alternative risk transfer. Corporate Ownership & Control, 6(1-3), 347-356. https://doi.org/10.22495/cocv6i1c3p2