Specialty lines ‘the next frontier’ for ILS
As insurance-linked securities (ILS) become increasingly attractive to investors, there is an opportunity to support both emerging and existing lines of business if the right product is in place, Michael Krefta, CEO of Hiscox Re & ILS, told Monte Carlo Today.
“ILS in general has now penetrated the marketplace to a lesser or greater extent, depending on the geography and the product,” Krefta noted.
“There has been huge penetration into the property-catastrophe space, but the next frontier for ILS is to find solutions for insurance and specialty products.”
This week Hiscox has soft-launched a new flood product, FloodXtra, which uses remote sensing, location level data, and topography data to work out the probability of a flood occurring in any individual postcode.
“The link back to ILS is that we have the opportunity to increasingly deploy those types of products against an ILS base,” Krefta said.
“It’s exciting for growing ILS funds and helps allow our clients to help fill the insurance gap. The takeaway for me from these last two hurricanes is just how underinsured even America is.”
For growth in this area to continue, Krefta stressed the importance of a product providing the right pricing as well as protection.
“At the moment I don’t think the market has this. The National Flood Insurance Program (NFIP) has proved it is very challenging to price individual flood risk,” he said.
“By using the latest technology in products to create a marketplace, ILS will follow. We think too much about capacity before we’ve thought about the product.”
Citing recent flood events in the US, and earthquake risk in California or Japan, Krefta believes these areas are “chronically underinsured”, not because there is a lack of interest or capital behind those things, but purely because the product isn’t fit for purpose.
“The question is how we make the products more beneficial to clients. How do we ensure better insurance penetration by leveraging what is a burgeoning reinsurance marketplace? Then you work out how you sell that and what capital you use to underpin it,” he concluded.
Get the latest re/insurance news sent to your inbox every day - Sign up to our free email newsletters
Today’s Monte Carlo stories
Beale mulls ILS solution to protect Lloyd’s market using new UK regulations
Allianz may seek additional reinsurance protection for cyber
VIG Re sets sights on Germany, France
Buyers seek extra protection after scare
XL Catlin sets its sights on the ‘fascinating’ Indian market
Costs need to fall to allow for re/insurance growth: Swiss Re
Irma, Harvey risks not reflected in price
“The first thing the Bermuda Market will do is pay”: KPMG
Irma will focus rating agencies on reinsurers’ ERM performance
Barbican eyes new opportunities ahead
Irma an opportunity for ILS to prove its credentials
Bond Dickinson unveils US combination deal
Irma: too early to see an effect on rates
JLT Re well placed for changes in market
Insurers facing data protection trouble
Fourth industrial revolution will transform insurance value chain
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Intelligent Insurer
Newton Media Ltd
Kingfisher House
21-23 Elmfield Road
BR1 1LT
United Kingdom