Understanding Risk and Risk Retention Mechanisms (16 hrs.)
9 CPE credits are available for the successful completion of this course
The fundamentals of risk management and insurance are the foundation upon which the captive insurance industry has been built. In this course participants will focus on “risk”: what it means, how it is managed, and how it can be financed. The objective is to understand the element of risk that must be present if risk it to be managed using an insurance mechanism, and how insurance differs from other risk financing mechanisms.
To understand the role of the captive as an alternative risk financing mechanism, it is necessary to begin with an understanding of the overall purpose and process of organizational risk management and the difficulties encountered when identifying and quantifying the impact of operational risk on an organization. The captive can be used to facilitate the management of operational risk. Its use in the risk management process improves the ability to quantify risk and provides an incentive to control its financial impact. Participants will examine how a captive contributes to the process of managing operational risk.
The captive’s second role in the risk management process is to assist in financing risk. Risk can be financed using non-insurance or insurance techniques. Organizations that retain risk may choose to self-finance it, which reduces some risk financing costs but eliminates some of the benefits they derive from insurance. To persuade large commercial buyers to continue to use insurance, traditional insurers offer a variety of cash flow and profit sharing insurance plans. These risk financing solutions may provide some of the advantages of self-insurance, but the insured may lose some of the benefits on insurance. Captive insurance is designed to maintain the advantages of self-financing and insurance without the disadvantages of commercial insurance.
Participants will examine the use of a captive for retention management, the operating cost differential between self-insurance, commercial insurance, and captive insurance.
Next Course begins in Fall 2014
Instructors: Sean Rider and Dennis Silvia
In addition to self-paced reading and assignment work, students will be required to attend six webconference sessions and complete two weeks of follow up assignments.
For further details please contact at ICCIE at 802-651-9050.