A changing attitude towards ILS as a form of risk transfer is now evident: cedants are moving growing chunks of their programmes to the sector and reinsurers are finding ways of getting in on the action. But perhaps the industry should not rely too much on this form of capital. Intelligent Insurer investigates.
The reinsurance industry is now in a post-convergence world, many would argue. The use of insurance-linked securities (ILS) has become the norm for many larger cedants, new investors continue to enter the industry and yet more reinsurers are developing their own means of leveraging this form of capital.
Even the use of the phrase ‘alternative capital’ can be cause for a raised eyebrow by some in the industry. “What’s so alternative about it? Capital is capital,” they say.
But perhaps the industry should not get too complacent and rely too much on this form of risk transfer—just yet. There are several things that could trigger the ebb of this money away from the industry.
ILS, risk transfer, Leadenhall Capital Partners, Queen Street X Re, SCOR Global Investment