In a soft market, one might think that alternative-risk solutions such as captives and rent-a-captives completely lose their value in light of the attractive pricing of traditional insurance products—but this would be an incorrect assumption.
History has shown that alternative-risk transfer (ART) products have proven their worth in all market cycles. While ART products may not be as sought after in a soft market, their fundamental core benefits remain: offering insureds greater control over their exposure to risk. So while competitive pricing may be available today in the traditional insurance marketplace, many insureds continue to want to self-fund certain exposures, especially general, products and/or professional liability.
And in many of these situations, a quality fronting carrier plays a critical role in order to achieve the optimal program structure and desired result.
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