Actuarial expertise that helps organizations take greater control of how they manage and finance risk

Traditional insurance is not the only way to manage risk. Organizations may choose to retain more of their own risk through self-insurance or establish alternative risk structures such as captives, risk retention groups (RRGs), self-insurance funds and workers’ compensation trusts.

Each approach brings different financial, actuarial, operational and regulatory considerations. Understanding expected claims costs, determining appropriate funding, setting rates, structuring reinsurance and maintaining adequate reserves all play an important part in establishing and managing an effective program.

Davies provides actuarial and insurance consulting across a wide range of alternative risk arrangements. We can help organizations assess whether an alternative approach is viable, support the formation of new structures and provide ongoing actuarial advice as their programs develop. Our experience includes both private and public sector organizations and extends across a broad range of insurance exposures.

Supporting alternative approaches to risk

The right structure depends on the organization, its exposures and what it is trying to achieve. For some, that may mean retaining risk directly through self-insurance. Others may benefit from a captive, RRG, self-insurance fund, workers’ compensation trust or another alternative arrangement.

Our role is to provide the analysis needed to understand those options and their financial implications. For organizations considering a new structure, this can include projecting historical claims costs and comparing them with traditional market rates, as well as assessing excess insurance and reinsurance structures, limits, retentions and coinsurance arrangements.

Once a program is established, we can provide ongoing actuarial support across reserving, funding and pricing, financial projections, capitalization, reinsurance and risk management.

Our alternative risk consulting services include:

• Feasibility studies
• Reserve and liability analyses
• Funding and pricing analyses
• Loss cost studies
• Rate and rating structure development
• Financial projections
• Capitalization analysis
• Reinsurance analysis and support
• Risk management support
• Market and benchmarking studies
• Regulatory support

The underlying source material also includes experience rating, retrospective rating, reinsurance submissions, management information and large-account underwriting support.

Supporting self-insured organizations

Our work with self-insured organizations ranges from annual reserve analyses and quarterly liability projections to funding and rating studies. We have supported self-insured entities of different sizes and structures, including private corporations, not-for-profit organizations, health systems, colleges and universities, financial institutions, public utilities, municipalities, school systems, transit authorities, trade associations and other public entities and groups.

Our experience encompasses workers’ compensation, general liability, automobile, property, employment practices, errors and omissions, health, law enforcement and other exposures. We also bring specific experience of the requirements and considerations affecting governmental and municipal self-insured entities.

Our consultants have supported the formation and operation of more than 200 alternative risk transfer mechanisms, including captives, RRGs, self-insurance funds and workers’ compensation trusts. Our work has covered alternative risk arrangements in a wide range of U.S. and international domiciles.

That experience extends from initial feasibility and formation through to the ongoing actuarial requirements of established programs. We have prepared loss cost studies, developed rates and rating structures, produced financial projections, advised on capitalization and reinsurance, and supported risk management and underwriting decisions.

Our consultants also bring experience from the regulatory side of the market, including reviewing captive and RRG applications and supporting regulatory examinations. This provides additional perspective on the actuarial and regulatory considerations involved in establishing and operating alternative risk structures.