DRP Benefits and Uses

Benefits

  • Accelerates the tax deductibility of claims within the primary policy's deductible layer
  • Removes the liabilities from the Insured’s balance sheet
  • Potential for tax deduction for the DRP premiums
  • Allows for the issuance of letters of credit

Uses – Industry Specific Examples

The deductible associated with:

  • Long Haul Trucking Operation (physical damage, cargo coverage)
  • Cattle Rancher (animal mortality)
  • Contractor (rip and tear coverage)

Uses – Other Examples

  • Employer portion of self-insured benefits plans
  • Deductible portion of a large deductible workers compensation plan
  • To provide aggregate coverage (e.g. Cover $250,000 per claim retention with no aggregate)
  • Property: Coastal wind, All Risk Deductible for large property schedules

DRP Options

  1. Return of Premium
  2. Premium Rollover
  3. Formation of PIC