climate ILS

The insurance-linked securities (ILS) market has long designed its risk transfer products and solutions using the insights gleaned from the outputs of catastrophe risk models, but in the future a “digital twin” could be a far more intuitive solution that can drive significant ILS innovation, we believe.

The influence of climate change on returns in the insurance-linked securities (ILS) market is uneven and ILS investment managers have access to the tools necessary to adapt to advancing climate risks, making it important that investors take a balanced-view, according to alternative asset advisors SIGLO Capital Advisors AG.

The role of the capital markets in the world’s transition to a low carbon economy as we look to tackle the threats of the changing climate, is “absolutely fundamental,” according to Rowan Douglas, Head of the Climate and Resilience Hub at Willis Towers Watson (WTW), and Chairman of Willis Research Network.

One of the clearest examples of a regulators’ intention to force action on climate-related financial risks and ensure entities have the capital resources to absorb their potential future losses from them, came from Bank of England Governor Andrew Bailey yesterday.

The Chicago Mercantile Exchange (CME), which has always been an exchange location where weather futures and derivatives have been traded, is set to use weather data for settlement and valuation of its contracts from specialist provider Speedwell.

TP ICAP group, one of the largest interdealer brokers in the world and Speedwell Group, a long-time specialist service provider to the weather risk management and parametric risk transfer market, have collaborated to launch a new climate index which aims to make financial risk related to the rate of climate change tradable.

With the world attempting to speed a transition to lower carbon economies and the key Conference of Parties (COP 26) beginning at the end of this month, it was interesting to hear Maria Rapin, CEO of Nephila Climate explain that a key focus for the company is now on product development.

Specialist catastrophe bond, insurance-linked securities (ILS) and reinsurance investment manager Twelve Capital has announced two new hires that bring sustainable and climate investing expertise to the company.

The insurance-linked securities (ILS) market has “breakout” potential as the sector returns to growth, increasing numbers of new sponsors enter the market, including from outside of insurance and reinsurance, but the real catalysts for future expansion could be climate change and ESG, Fitch Ratings believes.

With the G7 meeting in Cornwall, UK beginning tomorrow and the COP26 only five months away, CEO’s of major global corporations are calling on world leaders to scale up climate risk transfer as part of the financial response to climate change.