In the dynamic world of risk management and insurance, PARTNER RISK stands out as a pioneer in delivering innovative solutions that beneﬁt both their clients and the company itself. One such groundbreaking offering is “PayBack” (PB), a unique model that PARTNER RISK has exclusive rights to use. In this blog post, we’ll delve into the intricacies of PayBack and explore how it can be a game-changer for eligible clients.
What is PayBack (PB)?
PayBack, or PB for short, is a distinctive component of PARTNER RISK’s underwriting proﬁt strategy. It’s a mechanism through which a portion of the underwriting proﬁt generated by PARTNER RISK on its lead-line portfolio is allocated for Risk Management Expenditure (RME) to qualifying clients. PB operates on the principle of rewarding clients for their prudent risk management practices and overall partnership with PARTNER RISK.
How Does PayBack Work?
PayBack is designed to beneﬁt clients in two main ways: through Long Term PayBack (LPB) and Short Term PayBack (SPB). Let’s break down each component:
1. Long Term PayBack (LPB)
LPB is a key part of the PB model, aimed at rewarding clients for their
long-term commitment to sound risk management. Here’s how LPB works:
Annual Calculation: Each year, PARTNER RISK calculates the LPB amount, which is a ﬁxed 2.5% of the client’s Gross Written Premium (GWP).
Qualiﬁcation: Only clients whose claims remain below their Threshold Claims Ratio (TCR) will have a Surplus for the year and be eligible for an LPB amount.
Cumulative Surplus: LPB isn’t a one-time reward; it’s based on a rolling 3-year cumulative Surplus. If a client’s 3-year cumulative Surplus remains positive (Average Ultimate Claims Ratio below Average TCR), they qualify for LPB.
Distribution: The LPB amount is allocated to approved RME for the client and is committed annually. Importantly, this LPB payout is distributed irrespective of the overall proﬁtability of PARTNER RISK’s total portfolio.
Timing: LPB is calculated annually and estimated after 4 months of uninterrupted cover for a rolling 36 months. It is allocated thereafter, provided the policy remains in force.
2. Short Term PayBack (SPB)
SPB complements LPB and offers short-term rewards for clients with a commitment to responsible risk management:
Eligibility: Clients qualify for SPB if their claims are below their TCR for each successive PB year, and PARTNER RISK’s lead-line portfolio makes a proﬁt during that PB year.
Availability: A maximum of 2.5% of the client’s GWP for the PB year is available as SPB.
Proﬁt-Dependent: SPB is payable only when PARTNER RISK’s lead-line portfolio makes a proﬁt during a PB year. If there is no proﬁt, no SPB is available to clients for that year.
Calculation: SPB due & payable amounts are calculated annually at 1/11, provided there is uninterrupted cover.
Commitment: SPB amounts, once calculated, are committed to approved RME.
The PayBack Advantage
PayBack represents a unique opportunity for PARTNER RISK clients to reap the rewards of their risk management efforts. By aligning their risk practices with PARTNER RISK’s objectives, clients can beneﬁt from both short-term and long-term incentives. This innovative model underscores PARTNER RISK’s commitment to fostering mutually beneﬁcial partnerships with its clients.
PayBack is not just a rewards system; it’s a testament to PARTNER RISK’s dedication to promoting responsible risk management. For clients who meet the criteria, PayBack serves as a valuable resource for reinvesting in their risk strategies and enhancing their ﬁnancial stability.
If you’re a PARTNER RISK client or considering becoming one, PayBack is yet another reason to explore the advantages of partnering with a company that goes beyond conventional insurance. Unlock the potential of PayBack and elevate your risk management game with PARTNER RISK Solutions.
To learn more about PayBack and how it can beneﬁt your organisation, don’t hesitate to get in touch with our expert team at PARTNER RISK Solutions. We’re here to help you navigate the complexities of risk management with conﬁdence and rewards.