New Alternatives Aimed at Capacity Will Challenge Traditional Insurers

September 6, 2006

New alternative capacity markets are emerging that represent a more widespread challenge to the traditional insurance mechanism; while the alternative insurance market legacy structures, such as retentions and single-parent captives, are reaching maturity, according to a new study by Conning Research and Consulting, Inc.

“Today’s alternative market consists primarily of self-insured retentions, often supported by captives, and represents nearly one-third of the risk financing market today,” said Mark Jablonowski, an analyst at Conning Research & Consulting, Inc. “Yet retention alternatives are near or at their peak. At the same time, a new wave of alternatives are expected to emerge focused on capacity rather than price and competing more directly with traditional insurance.”

The Conning Research study, “Alternative Markets: Structural and Functional Evolution” presents the history and current situation in alternative markets, and analyzes the capacity markets that are now evolving.

“A new wave of alternative-capacity markets are being driven by the growth of low-frequency high-severity exposures,” said Stephan Christiansen, director of research at Conning Research. “These alternatives focus on the need for affordable risk capacity that will permit corporations to manage increasingly complex risk in the high-severity layers. At the same time, the availability of alternatives will become the impetus for traditional insurers to help clients stretch their capacity dollar.”

The study is available for purchase by calling (888) 707-1177 or by visiting

Source: Conning Research & Consulting, Inc.

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