At a pivotal point

The insurance-linked securities (ILS) market is at an interesting point in its existence and, as it develops further, it has real potential to shape not just the risk transfer sector but also the wider world for the better, believes Greg Wojciechowski, president and chief executive officer of the Bermuda Stock Exchange (BSX).

Wojciechowski says that the past seven years have been fascinating in terms of the way the sector had grown and developed.

“The BSX entered the market just after 2008,” he says. “We thought that there was an opportunity to help accelerate substantive convergence. It was widely reported that there was an exposure gap in the world and there was a firm understanding that capital was going to need to enter from the capital markets address the exposure. It wasn’t necessarily going to be the insurance industry covering  risks entirely.”

He says the BSX realised there was an opportunity to help facilitate the process of matching this capital with risks. But there was also a bigger vision, Wojciechowski explains - the understanding that the industry could help vulnerable populations.

“So, the capital markets, including regulated exchange platforms create the bridge, the transformation vehicle, to move that capital from where it sits right now to where it needs to be,” he says.

“This is a really interesting time in be involved in an industry that can do some good. We can make money, but we can also provide coverage and support for places that are developing and populations that are vulnerable.

“That’s going to come with capital moving into narrow the exposure gap and through structural changes in emerging areas to better facilitate coverage. What we’ve seen at the BSX has been an acceptance of investors in investing in insurance-related products and market conditions have supported that for those interested in alternate investments.”