The news that the UK government had identified insurance-linked securities as a key growth opportunity for the country was welcomed by the industry, but questions remain over whether there is sufficient political will to overcome the challenges in the way of this ambition, write Andrew Holderness and Ivor Edwards of Clyde & Co.
Interest in insurance-linked securities (ILS) has been ramping up for some time and a quick look at the size of the market explains why. In the first half of 2015 the issuance of new catastrophe bonds and other ILS recorded in the Artemis Deal Directory exceeded $5 billion, putting the market on course for a record year.
It was therefore unsurprising that in the Budget back in March, UK Chancellor George Osborne noted that the ILS market represents an important growth opportunity for the country and that the government would work with the industry and regulators to develop a new competitive corporate and tax structure for allowing ILS to be domiciled in the UK, thereby making greater use of so-called alternative capital.
Andrew Holderness, Ivor Edwards, ILS, Clyde & Co, London, Europe