Every soft insurance market raises the inevitable question for risk managers: Why do I need an alternative risk-transfer vehicle when I can easily get coverage in the standard market? But to even ask the question is to miss the point of ART.

In theory, the goals for using an alternative risk-transfer structure do not differ significantly between market cycles. Any qualified insured considering long-term benefits of ART will generally find that establishing such a structure in the soft market–which at first may seem counterintuitive–will pay dividends when the market turns.

Prospective ART buyers should not ignore the potential to control their own destiny in a soft market just because more insurance options are available and overall prices are cheaper. Those buyers who consistently achieve good loss results, actively promote risk management techniques, and would like to decrease the effect that insurance market cyclicality has on their business, should have finding an ART solution at the top of their list.