Jurisdictional competition should grow the ILS pie: BSX CEO

by Artemis on November 29, 2018

Competition between the widening array of regulatory jurisdictions that offer insurance-linked securities (ILS) platforms for market structures and services should serve to grow the size of the market, making shared experiences important so each can learn from others lessons learned.

This was the message at an ILS Bermuda and Bermuda Business Development Agency (BDA) event held in London, UK yesterday, as Bermuda Stock Exchange (BSX) CEO, BDA Director and ILS Bermuda Chair Greg Wojciechowski explained that competition can mean collaboration to grow the market too.

“There’s increasing jurisdictional competition in the ILS space, but it’s valuable in a market like London, that has created its own ILS platform, to share and exchange ideas,” Wojciechowski explained.

With the range of domiciles able to offer a competitive ILS regulatory environment expanding all the time, there are more countries working towards this as we write, the benefit for the ILS and collateralized reinsurance market is a broadening range of choice and tailored solutions suited to local regions as well.

As the ILS market continues to grow, if not in outright size currently as we explained in a recent article here, then in scope, reach, importance to global insurance and reinsurance risk transfer, as well as the size of the investor base, increased choice is also important.

Investors want to access risks in different regions of the world, through different marketplaces and localised regulatory environments that are set up and ready to issue ILS are essential in this regard.

Bermuda, being home to the lions share of global ILS activity still, is in a prime position to share its experience gained and expertise with other domiciles and jurisdictions, which was part of the delegations goal on visiting London this week.

“Competition doesn’t necessarily mean going after the same pie; it can grow the pie. There are experiences we’ve had, due to the maturity of our insurance and ILS sectors, that we can share. And the face-to-face exchange of ideas gives people comfort to do business with you,” Wojciechowski said.

As the ILS and collateralized reinsurance market looks to source new capital deployment opportunities, markets like London and those further afield such as Singapore will provide valuable locales to domicile ILS vehicles in, making the sourcing of specialist risks and regional exposures more efficient.

Multiple ILS domiciles is also good for expanding the global ILS investor base, providing regulatory environments that institutional investors are familiar with and can be comfortable allocating their capital to.

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