Strategic Risk Financing
Definition of "Strategic risk financing"
Elimination of unnecessary financing costs and the redirection of those sums to activities that are more profitable. The concept is for the company to have a long-term view of its risk exposure as opposed to concentrating on the availability of insurance at any time. For example, in a soft market, companies tend to buy more insurance than they need because premiums are low. In a hard market, companies tend to retain their insurance coverage regardless of price. The methodology involves a cost/benefit analysis of the numerous risk retention options to discern the difference in the cost of a retention option and that of full/partial insurance for that option. In the analysis of each option, the company's past loss experience is examined and maximum possible loss scenarios in the future are projected. After the statistical studies are completed, a program is designed to provide an effective plan of risk coverage at an efficient price.
Popular Insurance Terms
Table used in calculating minimum non forfeiture values and policy reserves for ordinary life insurance policies. These tables, which give minimum values that must be guaranteed to policy ...
Partnership between an agency of the U.S. government and the Foreign Credit Insurance Association (50 commercial insurance companies, both stock and mutual). Insures that businesses are ...
Property, liability, or health coverage that takes precedence when more than one policy covers the same loss. In order to avoid OVER INSURANCE, or paying an insured more than the actual ...
Insurance company program in which the beneficiary of an insurance policy is encouraged to leave the death proceeds in an account on deposit with the insurance company instead of receiving ...
Coverage in a separate policy or as an endorsement to the commercial general liability (CGL) form, for liability exposures for an employee who drives a leased car or his or her own ...
Procedure in employee benefit plans to calculate life insurance and retirement benefits to which an employee is entitled. ...
Indemnification bond under which a stock certificate holder who loses the original certificate will be issued a duplicate. The indemnity bond guarantees that if the original stock ...
Amount of reinsurance accepted by a second reinsurer which is in excess of the original insurer's retention limit and the first reinsurer's first surplus treaty's limit. ...
Coverage on cargo in overseas ships for war-caused liability excluded under standard ocean marine insurance. Not covered is cargo awaiting shipment on a wharf, or on ships after 15 days of ...
Have a question or comment?
We're here to help.