Very few companies are large enough for have sufficient risk appetite to fully retain all of their property/casualty commercial insurance risks. Moreover, the decision on what level of risk to retain is impacted by the state of the insurance market.
The signs of a firming insurance market—and likely soon to be hardening market—are upon us. It’s an ideal time for organizations to re-evaluate their total cost of risk using a real world example that will highlight the advantages, disadvantages, and trade-offs associated with varying retention levels under different market conditions.
This article was originally published in Best’s Review, November 2012 (subscription required).