ILS growth to persist as investors show optimism: Dubinsky, WTWS

Insurance-linked securities (ILS) investors responded to 2017 catastrophe events with growth and optimism and further expansion is expected throughout 2018, with InsurTech offering some potential, according to Bill Dubinsky, Managing Director and head of ILS at Willis Towers Watson Securities (WTWS).

Speaking with A.M. BestTV at the 2018 Artemis ILS NYC conference, held in early February in Manhattan, Dubinsky noted that WTWS, a division of insurance and reinsurance broker Willis Towers Watson, estimates there is $88 billion of alternative, or third-party reinsurance capital at year-end 2017, up from $75 billion a year earlier.

“So, they’ve responded to those losses with growth and optimism of how they can continue to support their trading partners going forward,” said Dubinsky, referring to the huge level of catastrophe losses experienced in the third and fourth quarter of last year, which impacted ILS investors.

But underlining the resilience, permanence and maturity of the ILS investor base, and as noted by Dubinsky, investors did a really good job replenishing their capital after both suffering and paying losses, leading Dubinsky to expect further growth in the months ahead.

“In 2018, given the success in paying claims and supporting cedants in 2017, the investors are seeing growth in their market share. And it may not be dramatic, but there’s definitely going to be continued growth in both assets under management (AuM) and then penetration in the reinsurance and insurance space,” said Dubinsky.

One area that has potential to impact the ILS space, according to Dubinsky, is the continued and growing influence of technology within the risk transfer industry, widely known as the InsurTech space.

InsurTech developments and advances threaten to disrupt the traditional insurance and reinsurance model, looking to increase efficiency throughout the value chain in an effort to bring more benefits to the end consumer and ultimately lower the cost of protection.

“Well we definitely see some potential for both ILS as efficient capital, and some of the changes in processes and underwriting claims handling that can come in through InsurTech, to create more efficient solutions, and in fact in some cases different solutions than what has gone on in the legacy industry. Obviously the legacy industry does a tremendous amount correctly, and will also be incorporating the technology to its benefit.

“So there’s a lot of potential on both sides for essentially a lower cost of insurance and greater availability of insurance going forward. It’s really very promising,” said Dubinsky.

Dubinsky was one of the 295 attendees at our Artemis 2018 NYC ILS conference on February 2nd 2018.

The full interview with Bill Dubinsky can be seen below: