Alternative Risk Transfer Mechanisms

Mandell Menkes is one of the few Chicago firms with a long-term involvement in the Alternative Risk Transfer practice area.

Reacting to the hardening of the insurance market in the mid-1970’s, Mandell Menkes lawyers pioneered the formation of group or association captive insurance companies for various industry or trade groups. Establishing such captive insurance companies allowed groups of insureds in the same or similar industries to obtain insurance coverage at a reduced cost or to obtain coverage which had become unavailable in the commercial marketplace.

Once having formed the captive insurance companies, our lawyers negotiated the necessary reinsurance agreements and other contractual arrangements. We participated in the management and operations of these companies, and provided all necessary corporate and tax advice to assure the smooth conduct of the captive’s business.

Over the years, our lawyers have established captive insurance companies for an association of greyhound track operators, for member tracks of the Thoroughbred Racing Association, and for the member tracks of Harness Tracks of America. In addition, we have formed captives for the pest control industry, a nation-wide group of truck leasing firms, and a nation-wide association of retail lumber yards.

We have also formed an agency-captive, and consulted with numerous insurers and brokerage firms regarding a multiplicity of insurance issues.

Our experience with the management and operation of the captive insurance companies led our lawyers to develop new technologies, tailored to the unique activities of each captive’s insureds, in order to manage and resolve the claims of each captive. Our efforts led to millions of dollars of savings.

With the passage of the Product Liability Act of 1981, and Liability Risk Retention Act of 1986, the practice expanded into the formation of Risk Retention Groups and Purchasing Groups. Mandell Menkes has helped form and register in various states over a dozen Purchasing Groups, representing such diverse industries as public television and radio broadcasting, newspaper publishing, law firms, real estate brokerages, pari-mutuel operations, lumber yards, and child care facilities.