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A report published this month by Willis Re Securities claims that relationships are important as the ILS market returns to a more normal environment.
Willis Re’s latest insurance-linked securities (ILS) report, “ILS Market Update: Slow return to normal”, points out that it is often said—to the point of being a cliché—that reinsurance is a relationship business and, as a counterpoint, that the capital markets are purely transactional.
However, according to William Dubinsky, managing director & head of ILS at Willis Re Securities, the reality, especially as reflected in the 2019 market, is more nuanced. Relationship behaviour is not the exclusive domain of reinsurers, and neither is transactional behaviour exclusive to investors.
“Some of the benefits of a strong two-way relationship seem relatively obvious,” says Dubinsky in the report. “For example, a counterparty may participate on one line of business or layer where it might not meet their return targets—with the expectation they will make money elsewhere with the same cedant. Familiarity also makes it easier for both sides to adapt to changes in the underlying business.”
Willis Re Securities, William Dubinsky, ILS, market, reinsurance