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corridor self-insured retention

Also known as a "bikini deductible," this is a self-insured layer, separating the primary layer of risk—whether insured, self-insured, or funded in a captive—from the layer immediately excess of the primary. It was first used in health insurance, inserting a deductible (a real deductible, not a self-insured retention (SIR)) between a first dollar insured health plan and major medical coverage, which is excess of the primary health insurance policy. The structure resembles a bikini because there's defined protection on the bottom and on the top but nothing in the middle. Corridor SIRs migrated from health insurance to property and casualty applications when risk managers, brokers, and creative excess insurance underwriters were looking for more sophisticated methods of allocating and funding risk. Typically, the corridor SIR layer is unfunded. It's used to lower the cost of (or provide access to) excess or umbrella insurance, while relieving the insured from the requirement to fund for expected losses. It is also used in structured insurance arrangements. Corridor SIRs can be designed to cover non-aggregated per occurrence limits or a combination of per occurrence and aggregate limits. A typical corridor SIR will include per occurrence limits perhaps subject to an annual aggregate, depending on the risk and the excess insurance pricing.

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