SIGMA's Collateral Overview Brochure

Michelle Bradley, ACAS, MAAA, ARM, CERA, CCIS, Consulting Actuary and Enoch Starnes, ACI, Captive and Complex Risk Consultant

Collateral requirements are a common topic in the insurance industry, as companies with large deductible or self-insured programs are required to post collateral to secure their associated liabilities.  States requiring this type of security typically have a well-defined process for determining the collateral amount.  Unfortunately, that may not be the case for carriers whose formulas and processes for collateral requirements are not clearly defined.

When moving to a loss-sensitive program, insureds are often caught off guard by the growth of collateral burden over the first several years. Understanding and anticipating how these burdens build and eventually reach a “steady state” is an important process, but at times, it can be difficult to fully understand.

To help make this process easier, SIGMA has developed a PDF resource and brochure to specifically address the potential complexities associated with collateral requirements.  It starts by presenting a high-level summary of why collateral is posted, then moves to addressing the types of analyses that might be useful for collateral negotiations, as well as the associated data requirements.   From there, the focus shifts to an example of the collateral formula, and, finally, a checklist is provided for managing the analytical collateral process.

Click to request a PDF or printed copy.

We welcome your feedback by posting a comment or contacting us at support@SIGMAactuary.com.

© SIGMA Actuarial Consulting Group, Inc.

Leave a Reply

Your email address will not be published. Required fields are marked *

Archives

Recent Posts

A Practical Guide to Navigating Fairness in Insurance Pricing
Rich Moncher recently co-authored a research paper with Jessica Leong and Kate Jordan, and it was published by the Casualty Actuarial Society. Each paper in this research series addresses a different aspect of race and insurance pricing as viewed through the lens of property and casualty insurance, ...
Read More
When Captives Require Multiple Actuaries: Key Considerations
In a recent article published by Captive International, Jason Luckett and Ben Brandon of Risk Strategies Consulting look at what happens when a captive sees the need to employ another actuary. Captive insurance companies can be a great tool, as they are uniquely capable of meeting the specific insu...
Read More
Navigating the Impact of Claims-made and Occurrence Policies on Loss Development
When analyzing insurance-related data, actuaries must always be cognizant of the nuances within the underlying policies, particularly when it comes to their impact on Loss Development Factors (LDFs). The complexities they present may grow more pronounced when the policy type changes over time or has...
Read More
Assessing Financial Strategies for Cyber Risk
The assessment tools available in RISK66 are an integral part of our platform, and we would like to thank those who have shared positive feedback over the years regarding their usefulness. Because of our desire to continue providing exceptional support to our RISK66 users, SIGMA is excited to a...
Read More

Subscribe to Our Blog



hello world!
Copyright © 2023 – 2024 SIGMA Actuarial Consulting Group, Inc. All Rights Reserved.
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram