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arrangements, typically, the insured is able to retain underwriting income, according to the blog post. The amount of earned premium retained by the insured varies significantly and depends on the arrangement and structure. In other words, if you don’t have claims you get back some or all of your paid premium. This aspect can be a substantial driver of transferring such risk versus self-insurance.


Captive Insurance Companies and Excess and Surplus Line Insures In its simplest form, a captive is a wholly owned corporate subsidiary created to provide insurance to its non- insurance parent company or compa- nies. Captives are established to meet the risk-management needs of the owners or members. These companies can be used to cover self-insured risk typically in a more efficient manner.


Once established, the captive operates like any commercial insurer—i.e., it issues policies, collects premiums and pays claims but it does not offer insur- ance to the public—and it is regulated as a captive, rather than as a traditional


insurer, according to a January 2012 article, Recent Developments in the Captive Insurance Industry, by Sha- nique Hall on the National Association of Insurance Commissioners web site. Excess and surplus (E&S) lines insurance is a segment of the insurance market that allows consumers to buy property and casualty insurance through the state regulated insurance market, where policyholders, agents, brokers and insurance companies all have the ability to design specific insurance coverages and negotiate pricing based on the risks to be secured. “Freedom of rate and form” has given the E&S market the ability to adapt quickly to changing market conditions and those entities seeking this unique insurance protection, according to the American Association of Managing General Agents web site. Generally, the “[i]nsurance industry has realized that though conventional risk transfer solutions are almost always


favored (when available at


viable pricing levels), it becomes essential to investigate the value of non- conventional solutions and to focus on the benefits that can be derived from these solutions,” according to the post on advisoryfyi.com. Finding placement for alterna-


tive risks typically requires the use of insurance professionals to secure coverage for


risk in the appropri-


ate vehicle. What risks keep you up at night? Once you consider what self-insured risks can be transferred, transferring those risks will help bet- ter protect your ASC from unforeseen events and allow you as the owner to continue the journey of building and maintaining a successful practice.


Benjamin S. Terner is an attorney in Connecticut and New Jersey and an adjunct professor of law–risk management at Texas A&M University School of Law. Write him at Bterner@einsteinfs.com.


16 ASC FOCUS SEPTEMBER 2016


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