A set of techniques transferring risk outside the traditional insurance and reinsurance circuit.
Alternative Risk Transfer, often designated by the acronym ART, brings together the set of techniques allowing a risk to be transferred or financed outside the traditional insurance and reinsurance circuit. It covers varied tools, captives through which a group self-insures its risks, Insurance-Linked Securities and catastrophe bonds that transfer risk to capital markets, parametric insurance based on objective triggers, and structured financial products combining insurance and markets. The common objective is to access additional capacity, diversify cover sources and address risks the traditional market prices poorly or refuses to carry. ART takes on particular importance for emerging and hard-to-insure risks. The AlgoPolis paper sees in it a possible survival path for highly automated firms facing the uninsurability of algorithmic execution, through parametric insurance triggered by oracles and smart contracts, or the creation of dedicated captives immobilizing massive reserves. The limitation of ART is that it does not make the risk disappear, it reorganizes its financing, and often requires a capital lock-up or an exposure to basis risk that conventional insurance avoided.
Unable to find sufficient cyber cover on the conventional market, a group combines a captive with a parametric cover triggered by the measured downtime of a provider, illustrating an alternative-transfer approach.
ART, transfert alternatif de risque, alternative risk transfer