While many reinsurers and captives understand and use collateral alternatives, those running large corporate deductible programmes often do not. Robert Quinn from Wells Fargo explains the benefits of this simple and affordable option.
Having been a contributor to Intelligent Insurer on numerous occasions, I have often written about the differences between the collateral alternatives used for reinsurance and insurance-linked securities (ILS) programmes. And through the various captive publications, I have written about collateral alternatives for captive insurance programmes. The subject has also been raised at conferences more times than I can remember.
But having just finished a phone call with some industry contacts of mine, I realised that not everyone understands the alternative forms of collateral available for what is, most likely, the most common type of corporate insurance: large corporate deductible programmes. Never one to miss an opportunity to get the word out (or create something my mother can hang on her refrigerator), I am happy to explain.
In the interest of creating some level of credibility, I will say that I have been working on developing alternatives to letters of credit (LOCs) used to collateralise insurance programmes for more than 13 years. In that time, my team has helped our clients replace (or eliminate the need for) more than $100 billion worth of LOCs.
Wells Fargo, Robert Quinn, Collateral Alternatives, Letters of Credit