User:REZGutierrez623/sandbox

Customization
The major market of alternative risk transfer is through self-insurance, where companies are still regulated by the government but it allows a company to have self-efficiencies through reducing costs and allowing a faster claims process. The alternative risk transfer market gives a company many types of choices in regards to policy-making, giving it a customized nature. The features of alternative risk transfer are that it allows the consumer to get a policy that matches their unique needs, coverage can be obtained for several years and for more than one line. In addition, due to their non-traditional nature of business, much of the risk covered under alternative risk transfer is mainly obtained through the transfer of said risk to the capital markets, allowing companies to source its capital. The non-traditional nature of alternative risk transfer thus allows those with different needs, from regular insurance customers, to get risk management that fits their needs.

Cost reduction and simplified administration
Through the merger of risk transfer and retention, alternative risk transfer gives companies protection at a low cost, to the benefit of both insured and insurer. Many programs that consolidate risk through instruments, such as enterprise risk management programs, can reap in benefits as a result of the alternative risk transfer program being implemented. In addition from cost reductions, alternative risk transfer programs are not as easily influenced by the market, allowing stability and a more predictable market from risks. It is also similar to a surplus lines market to where it also attempts to cover, through financing or transferring, non-traditional exposures and risks, especially ones large in cost. One of the drivers of the management is that they seek to reduce both taxes and costs, though in return the costs of transactions can be high. The advantages of using alternative risk transfer is that diversification exists through the finance or transfer of risks, tax benefits, and a low cost to companies in different industries. The disadvantages are moral hazard risks, among other types of risk.

Since the mid-2000s, many more companies are seeking to obtain alternate means of risk transfer through alternate risk transfer programs. This has resulted in a shift where there is more focus on these types of alternate risk transfer and develop this market further, in addition to a changing insurance market and further technological advances. The development and shift to ART has then allowed companies to re-think how their risk is going to be transferred or much can be retained, allowing companies to seek risks that are low volatility and predictable and losses are high in frequency but low in severity.