Use of the capacity available on capital markets to cover insurance to cover insurance risks e.g. through the securitization of natural catastrophe risks. See Also: “Risk Management: Alternate Risk Transfer (ART).”
Insurance Encyclopedia
Alternative risk financing An ART (qv)
term describing techniques that provide a funding source other than conventional (re)insurance to meet defined risks. The insured may seek to smooth his earnings over a period of years and seek committed funding to deal with prospective loss and/or secure post-loss funding. The insurer taking the risk combines discounted cashflow techniques with actuarial risk analysis. Techniques include: finite reinsurance, financial reinsurance and contingent capital.
Alternative Risk Transfer
methods of transferring insurance risk, other than by conventional reinsurance.
Alternative risk transfer (ART)
Generic phrase to denote various non-traditional forms of (re)insurance and techniques where risk is transferred to the capital markets. More broadly it refers to the convergence of (re)insurance, banking and capital markets. See FINANCIAL REINSURANCE; FINITE REINSURANCE; SECURITISATION; ALTERNATIVE RISK FINANCING; WEATHER DERIVATIVES. (See Figure 1).
Alternative work assignment
In workers’ compensation case, the placement of an injured worker in another job with the same employer as a temporary or permanent accommodation to the workers’ disability.