Insurance Scheme ConsultingScheme strategy and direction – RACSAP has a wealth of experience
There are many collective insurance schemes across the region providing insurance policies and other related support to their members and also their customers, as well as many associations taking or considering the same approach.
The reason for such schemes is that they can offer better products to their members and customers at better prices than the conventional insurance market. A principal key to the savings they achieve is their ability to retain or self-insure risk without compromising on financial stability, thereby avoiding the tax, brokerage and other frictional costs associated with conventional insurance. They have the ability to retain risk because they encompass large volumes of widely spread, individually small risks which are relatively predictable in terms of annual claims costs. Where conventional insurance is required, usually to cover unpredictable “low frequency, high severity” losses, their buying power enables them to obtain this at favourable rates.
Collective and association schemes vary in terms of levels of maturity, sophistication, self-insurance, risk transfer and risk management. The most effective ones capture and use exposure, claims and other data to develop and refine product structures, risk management strategies and risk financing options that serve their members’ needs in the most cost-efficient manner possible. Generally speaking, the better their knowledge, the more risk they can retain and the greater savings they can achieve.
Our consultants have deep experience working across the entire spectrum of scheme design and management, and can provide a collective or association scheme maximum knowledge and control and maximum savings over the long term.
Most importantly this can be delivered in a truly independent and objective manner ensuring that the best interests of the members and the overall purpose of a scheme are properly protected.
Some of the key points in a consultancy appointment would be as follows:
- Understanding the collective or association’s exposure base and how its risks have been financed in the past, whether or not a scheme has been in place.
- Understanding the present risk needs of the membership, taking into consideration its exposures, financial position, regulatory environment and other factors.
- Agreeing long-term objectives including the risks to be covered, the products to be offered and the results that these are expected to achieve.
- Evaluating all the options going forward to achieve the objectives in the most cost-effective manner possible, including the potential for self-insurance within a captive insurance company or otherwise.
- Agreeing an implementation plan.
- Assistance with executing the plan.
- Assistance with assessing the performance of the program and its continuing management.