Why Do We Need to Post Collateral?


“Here we are, a large corporation with significant assets, yet we have to post collateral to an insurance company?”  This question has been posed to many risk managers by their corporate treasury department or Chief Financial Officer when arranging the collateral required under a large deductible insurance policy.  In order to answer this question, its best to understand the comparison between a large deductible insurance product and a standard, guaranteed-cost insurance program.