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The Insurance Times

ART) is the use of techniques other than
traditional insurance and reinsurance to provide
risk bearing entities with coverage or protection.
The field of alternative risk transfer grew out
of a series of insurance capacity crises in the
1970s through 1990s that drove purchasers of
traditional coverage to seek more robust ways
to buy protection.

Most of these techniques permit investors in the
capital markets to take a more direct role in
providing insurance and reinsurance protection,
and as such the broad field of alternative risk
transfer is said to be bringing about a convergence
of insurance and financial markets.

A major sector of alternative risk transfer activity
is risk securitization.Alternative risk transfer is
often used to refer to activities through which
reinsurers or insurers transform risks from the
capital markets into insurance or reinsurance
form.

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