A term commonly used in risk financing to refer to one of a number
of risk funding techniques (e.g., self-insurance, captive) or facilities
(e.g., ACE, XL) that provide coverages or services outside the realm
of that provided by most traditional property-casualty (P&C) insurers.
The alternative market may be utilized by large corporations, for
example, to provide high limits of coverage over a large self-insured
retention (SIR), or by smaller entities participating in a risk
retention group (RRG) or group captive program. Note that the distinction
between traditional and alternative markets tends to blur over time
as many traditional insurers expand their offering of products to
encompass alternative-type funding techniques and vice versa. Also,
retrospective rating plans, especially paid loss plans, are sometimes
identified with the alternative market.
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