Eduard Held, head of sales and products for PERILS AG, considers the factors behind the continued dominance of US perils for ILS, and explores what is needed for the market to expand into other territories and risks.
With $2.7 billion of outstanding risk limits, European windstorm risk was the third largest peril in terms of insurance-linked securities (ILS) outstanding as at the end of 2014. US wind and US quake rank first and second, respectively, with approximately $12 billion and $5 billion of the total $23 billion outstanding ILS capital.
US peak risk continues to dominate compared to European wind, and ILS—as a risk transfer instrument and as an asset class—must grow into new territories, covering new perils and secondary cat events, such as flood in Central and Eastern Europe.
Demand from re/insurers
