Contingency Policy
Conventional insurance, but with the added benefit of allowing the client to share in underwriting profits.
Conventional insurance, but with the added benefit of allowing the client to share in underwriting profits.
A contingency policy is a conventional policy which provides the protection of conventional insurance, but with the added benefit of allowing the client to share in underwriting profits based on favourable claims experience and implementation of sound risk management principles.
Each contingency policy is normally written for a one year period and may be used to insure a multitude of risks. It is typically used to provide for the primary layers of an insurance programme or for risks that are difficult/expensive to insure conventionally.
Contingency policies may be issued as standalone or as part of a seamless arrangement whereby reinsurance is structured above the layers provided by the contingency policy. At expiry or cancellation, a performance bonus is declared, based on favourable claims experience.
Key Benefits
- Flexibility to facilitate various combinations of structure, premium, cover, reinsurance and insurance capacity.
- A tool for risk management and for controlling the company’s risks, losses and exposures.
- Actuarial input on suitable limits as well as attachment points for reinsurance.
- A facility for sharing in underwriting profits.
- Reduced exposure to volatile price-cycles in the conventional insurance market.
- The creation of insurance capacity for difficult or “expensive to insure” risks which helps create sufficient reserves to absorb and facilitate larger risk retention in future.
- Budgeting certainty in that the cost of risk can be determined more accurately.
Client Profile
Small to large organizations with risk exposures.
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