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
Hospital insurance program that provides medical professional liability insurance coverage to non employed hospital physicians. The objective of this means of insurance coverage is to ...
Coverage for negligent acts or omissions of an operator of a motel or hotel resulting in bodily injury to guests and damage or destruction of a guest's property. ...
Financial incentives credited to the policy to encourage the policyowner to keep the policy in force. The incentives may be utilized by: (1) applying them to the policy cash value after a ...
Income paid under a disability policy that is not covered under workers compensation benefits. It is usually expressed as a percentage of the insured's income prior to the disability, but ...
Bureau insurer that files its statistical and underwriting experience with a rating bureau. ...
Coverage if an insured is legally liable for bodily injury or property damage caused by an automobile. The personal automobile policy (PAP) and the business automobile policy (BAP) cover ...
Sums payable to the winning plaintiff by the losing defendant in a court of law; can take any or all of these forms: general, punitive, and special. ...
Purchasing bond investments that mature at different time intervals. ...
Describing the time of payment of face amount (face of policy) upon the death of the insured, or when the cash value in an endowment insurance policy equals the face amount. ...
Have a question or comment?
We're here to help.