Journal PostsLevel 3
The self-insurance of risk occurs with various facets. Self-retentions and proportional loss participation (or mixtures of those) are the most common means.
So-called finite-insurance concepts are another interesting means of self-insurance. Classical endowment life insurance is a special case of finite insurance with a profit participation at 100% level. In contrast to the portfolio approach underlying traditional insurance, diversification is here achieved along the time axis rather than within a risk community. In a 'non-life' context, finite-insurance particularly lends itself to the smoothing of (extreme) temporary volatility, which however, does not persist in the long-run.
Our services comprise
- the analysis of which means of self-insurance should be considered given a context of risk, subject to the results of levels 1 and 2,
- a cost-benefit analysis that evaluates the economics of self-insurance versus risk transfer, and
- based on the latter analysis, we propose the optimal mixture of various means of self-insurance which then leave a residual proportion of risk to be transferred to insurance or reinsurance markets (including capital markets -> securitization).