Allianz calls for catastrophe bond standardisation

by Artemis on October 26, 2009

In an article published on Bloomberg news today Allianz spokespersons have called for the catastrophe bond market to become more standardised and affordable. I don’t think they’ll get much argument there from anyone involved in this market. Standardisation would open the door to quicker issuance, more transparency and increase affordability by making it much easier for issuers to acces the market. It would also help investors better understand the risks they were taking and make the notes themselves easier to assess and understand.

Clemens von Weichs, head of Allianz Re, said that cat bonds need to move ‘from handmade to manufactured’ so they can be brought to market more cheaply. He also said that he is convinced the market will continue to grow and that the insurance linked securitization market really needs to move into other lines of business. Great quotes and again all market participants would echo those thoughts.

How standardised can cat bonds become though? Could we see set structures for different types of risk, possibly set multi-peril structures? Perhaps a two-tier market with standardised mini-cat bonds designed for smaller, more defined transactions and customised larger deals is the direction we are heading in. Or would standardisation stop at the legislation, paperwork and asset types available? What do you think?

You can read the full story from Bloomberg here.

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Boslino October 27, 2009 at 9:14 am

The market will never go in the direction of standarisation – how else will Goldman’s be able to justify their million dollar plus fee charge to issuers?

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