Deductible Reimbursement Policies
Traditional large deductible programs have several weaknesses. First of all, the insuring carrier acts as “the bank” - meaning they dictate the timing and amount of security required. This setup minimizes the portability of the program to other carriers, thus creating a sort of “collateral jail.”
Secondly, the client assumes the large deductible risk on its balance sheet with out the tax and accounting benefits afforded traditional carriers.
And lastly, the client lacks an insurance vehicle for justifying future large deductible claim obligations to third parties.
Our firm has the ability to implement a structure involving two policies both issued by the same insurance carrier, and will combine the inherent flexibility of a large deductible policy with a uniquely crafted second policy called a Deductible Reimbursement Policy (DRP).
A DRP is highly customized to satisfy the traditional large deductible obligations, including collateral requirements, claims escrow and paid loss reimbursement.
At its core, a DRP presents the client with a “first dollar” insurance program, an opportunity to receive both underwriting profit and investment income, and the ability to tailor the long-term funding of their future insurance obligations.