With the end of year renewals approaching, Tom Johansmeyer, AVP – reinsurance services, marketing at ISO/Verisk Insurance Solutions, lists what the ILS industry needs to have on its "To do" list.
The January 1, 2016, reinsurance renewal season is in full swing. As the industry continues its annual ritual, the conversations occurring among cedents and markets reflect emerging industry trends, the continuation of prevailing market conditions, and the specific objectives of cedents, reinsurers, and third-party capital providers. We’ve seen five key themes of strategic importance emerge for this renewal season based on our experiences last month at the Rendez-Vous de Septembre and ongoing client and market discussions. As a result, here’s how we see the industry’s “to do” list shaping up for the next three months.
1. “Lite” and sweet: Cat bond lite continues on its rapid growth trajectory. Interest from new entrants comes following a record-breaking 2015 in which capital raised through publicly revealed transactions more than doubled the full-year 2014 total. And discussions around the market suggest that 2016 could be bigger than 2015. So far, cat bond lite use has complemented the broader catastrophe bond market, and that seems unlikely to change. The two catastrophe bond approaches help cedents meet specific needs (as do other forms of risk transfer, such as industry loss warranties), showing that innovation is still driving improved risk and capital management.