casualty risk

Exposures in the casualty insurance and reinsurance sector are inherently difficult to predict and model, meaning until a market transformation occurs the casualty space is likely the biggest threat to the re/insurance industry, according to Wills Re’s Andrew Newman.

The presence of alternative capital in the global reinsurance market has, due to various factors, largely focused on property catastrophe business lines to date, but analysts’ predictions signal greater expansion of ILS into casualty risks ahead.

For casualty risks to become a meaningful part of the insurance-linked securities (ILS) and catastrophe bond market, transactions need to be structured in such a way that investors can see a clear exit point, according to Chris Parry of Aon Securities Limited.

While the reinsurance market remains challenging strategically sound business models become more important than ever and while casualty lines offer several structural advantages, this can mean higher barriers to entry, according to analysts at Goldman Sachs.

Reinsurance broker Willis Re has this morning announced the launch of a new global syndicated reinsurance facility, aiming to provide cedents with broad protection against casualty catastrophe events related to liability portfolios.

The practice of successfully and accurately modeling casualty or liability catastrophe risks is something that continues to prove difficult for insurance and reinsurance firms, making them most likely a slow area of expansion for ILS and alternative capital.

An innovative new risk modelling tool has launched this morning which could help to increase transparency and understanding when modelling casualty risks for insurers, reinsurers and insurance-linked securities (ILS).