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As affordable housing organizations are facing their annual insurance renewals, many have been amazed at the level of premium increases they are experiencing. Today's challenging and volatile insurance market has significant effects across the industry and has led many forward-looking industry leaders to consider alternative risk financing mechanisms, such as prisoners. Our affordable housing team has received more and more questions about prisoners, but this is not just anecdotal. According to industry trends, interest in prison insurance in the United States has increased sharply during the first quarter of 2021
What is Captive Insurance?
Captive insurance is an alternative risk financing solution that affordable housing organizations can use to take control of their insurance program, reduce the effects of insurance market volatility and create potential for financial gains.  With prisoners, the traditional insurance model is turned upside down with the insured unit strategically taking risks while reinsuring less predictable and volatile loss layers. This structure leads to a way of thinking about ownership that drives better risk management, which results in better profit losses. Insurance becomes part of your company's long-term strategy compared to an annual uncontrollable transaction.
How do prisoners work?
Prisoners are a form of self-insurance. As your own owner, you basically create your own insurance company. Unlike more traditional programs, group insurance allows members to benefit from a positive loss experience.
Catch premiums consist of fixed costs (fronting, reinsurance, taxes, loss of loss / operating costs, operating costs, internal management) and variable costs (loss financing). A significant advantage for prisoners – especially in the current market – is that loss funds are directly related to your company's exposure and earnings rather than the entire insurance market.
Real estate and accident prisoners work with significantly different financing structures (and appendices) points). There is much greater market exposure among property catchers due to the higher policy limits – for example, a property loss limit can be $ 100 mm or higher (given portfolio values) compared to $ 1 mm damage policy limits. These higher property limits create the need to buy significantly more capacity from the market. So even though the captured insurance layer may be the same between the two types of catches, the additional market exposure for properties may make it more difficult to structure property catchers. This is an important consideration for affordable housing organizations as property exposures are an important part of the overall risk equation.
Would Affordable Housing Organizations Consider Prisoners?
Affordable housing organizations should consider prisoner insurance if they are financially sound, have committed leadership that is committed to managing risks with a long-term focus, and are willing to accept strategic risk levels. insurance with an acceptable risk exposure.
If you have any questions or would like to discuss the feasibility of a group insurance for your organization, please email me at email@example.com or call 540-224-1774.