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Hybrid

Hybrid

Definition

A type of risk financing plan that makes use of both internal and external funds to pay losses. It thus falls between a pure transfer approach and a pure retention approach to risk. The costs of hybrid techniques tend to be less experience-responsive as compared to pure retention but more experience-responsive as compared to pure transfer techniques. Examples of hybrid techniques include pooling arrangements, high-deductible plans, multiple-parent captives, and retrospectively rated insurance policies.

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