Dual trigger insurance
Encyclopedia
Dual Trigger insurance is an insurance
(or reinsurance
) program where the limit, premium, or retention are linked to one or more contingencies other than insurable hazards. Such contingencies are often external to the buyer
, objectively measurable, and uncorrelated with the hazard risk(s) covered under the program. The contingency may included an event-linked trigger associated with the financial performance of the buyer
, particularly those performances most closely related to earnings
.
Such programs can be used to provide, in effect, insurance
that only comes into play in otherwise 'bad' years. While often described in theory, these programs are rarely, if ever, placed.
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
(or reinsurance
Reinsurance
Reinsurance is insurance that is purchased by an insurance company from another insurance company as a means of risk management...
) program where the limit, premium, or retention are linked to one or more contingencies other than insurable hazards. Such contingencies are often external to the buyer
Buyer
When someone gets characterised by their role as buyer of certain assets, the term "buyer" gets new meaning:A "buyer" or merchandiser is a person who purchases finished goods, typically for resale, for a firm, government, or organization...
, objectively measurable, and uncorrelated with the hazard risk(s) covered under the program. The contingency may included an event-linked trigger associated with the financial performance of the buyer
Buyer
When someone gets characterised by their role as buyer of certain assets, the term "buyer" gets new meaning:A "buyer" or merchandiser is a person who purchases finished goods, typically for resale, for a firm, government, or organization...
, particularly those performances most closely related to earnings
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
.
Such programs can be used to provide, in effect, insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
that only comes into play in otherwise 'bad' years. While often described in theory, these programs are rarely, if ever, placed.