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Careful Planning Needed For ART Programs

Careful Planning Needed For ART Programs The turn of the insurance marketplace has forced many insurance buyers into the unenviable position of having to choose ...

By Diana B. Reitz, CPCU | Updated on March 04, 2003

Careful Planning Needed For ART Programs The turn of the insurance marketplace has forced many insurance buyers into the unenviable position of having to choose among the lesser of evils. The evils they face may come in the guise of going bare, paying double- or triple-digit premium increases, or perhaps aligning their fates with an insurance carrier that isnt as financially sound as theyd like.

Many have met the challenge by turning to the alternative risk transfer arenabuying into captives, trying on self-insurance, or, at the least, testing the ART waters by agreeing to share in their risks through various types of cost plus or retrospectively rated programs.

There are, however, some pitfalls to the ART world that might not be apparent on first blush and that may cause problems over time.

Regardless of whether its by choice or the market is forcing an ART program on them, insurance buyers should be looking to alternative risk financing not as merely a method to save money, embellish cash flow or circumvent market conditions, but, rather, to gain and exercise control over risk. Corporate decision makers cant expect to enter the arena without a true commitment to managing their risk and expect not to get hurt.

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