ILS diversity is key to the future


ILS diversity is key to the future

The future of ILS depends on increased levels of diversity, according to Clive O’Connell, partner, head of insurance and reinsurance at McCarthy Denning.

2018 was an important year in the development of the insurance-linked securities (ILS) market and 2019 is set to be even more important. Over the next 12 months we will see how ILS can develop as an investment class while, at the same time, providing insurers and others who carry risk, with viable and efficient protection.

Diversity is the key to the future development of ILS. The last couple of years have shown the danger of the dominance of US wind risk. In order to build a properly diverse portfolio of risk, investors need to be able to invest in products that escape this accumulation of wind risk and look instead to other geographic areas and different classes of risk. Increasingly, the search for diversity is also looking beyond geography and class and into different products.

Some issues need to be resolved in order to enable a spread of risk.

ILS, diversity, O'Connell, Clive

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