Global marine and energy: new access to original risk

Now that the market has a solution for ocean marine and offshore energy, the time could be right for these risks to flow into the ILS market, says Tom Johansmeyer of Verisk Insurance Solutions.

The market has been crying out for original risk for years. Property-catastrophe risk was always supposed to be a first step for insurance-linked securities (ILS), not a destination. However, it’s looked more like the latter for some time.

The occasional efforts to get new risks into the ILS space, although successful, haven’t achieved scale. Creativity, client focus, and even sheer triumph of will can get a transaction completed, but they aren’t necessarily enough to make a new idea stick around long enough to become an old one.

For that to happen, the market needs to implement the appropriate infrastructure to support the absorption of new risks. If there were a common checklist to which we could all refer, industry-wide loss aggregation would be at the top. Now that the market has a solution for ocean marine and offshore energy, the time could be right for these risks to flow into the ILS market.