The insurance protection gap

The protection gap – underinsurance in emerging and developing economies and the gap between economic and insurance losses – the opportunity that is on every reinsurance CEO’s lips and which presents the largest opportunity to put excess risk transfer capital to use, requiring both traditional and capital markets support.

In a market that is faced with abundant and ongoing pressure, from excess capital, new entrants, the capital markets, reductions in buying, consolidation of reinsurer panels and difficult global financial market conditions, the reinsurance industry is focusing on the next big opportunity.

This opportunity provides both reinsurers and ILS fund managers with an opportunity to assist in building the world’s resilience to disaster risks, while providing rapidly paying post-event risk finance, at the same time as growing the world’s catastrophe risk markets.

It’s win-win for both sides, those in need of resilience and disaster risk financing and the re/insurance and ILS market which is keen to expand into new regions, perils and opportunities. Narrowing the protection gap is expected to be a key focus for years to come.

Share

APEC wants regional catastrophe bond market for Asia-Pacific

A regional catastrophe bond market for the Asia-Pacific region has become a focus of the business focused arm of the Asia-Pacific Economic Cooperation (APEC).APEC has long been a supporter of the use of insurance-linked securities (ILS), such as catastrophe bonds for disaster risk financing using the capital markets as a read the full article →

Risk transfer, reinsurance key to address reality of climate change: Guy Carpenter

The reality of climate change needs to be addressed and addressed fast by countries, governments and public sector entities, and the risk transfer, reinsurance and insurance-linked securities (ILS) sectors are well-placed to assist, according to Guy Carpenter.The catastrophe bond is highlighted as a key risk transfer and resilience financing tool read the full article →

Cat bonds, risk pools, parametric triggers key to risk mitigation: Aon

Innovative insurance and reinsurance mechanisms such as catastrophe bonds, risk pooling facilities and parametric triggers are all key ways that risk mitigation can be improved in the world's most vulnerable areas, Aon said today.The insurance and reinsurance broker highlighted the continuing issue of the protection gap and the need for read the full article →

Insurance & ILS are shock absorbers for climate, but need adjusting to the risk: McKinsey

Insurance products, reinsurance and insurance-linked securities (ILS) are all examples of financial shock absorbers for climate change risks, but while it can encourage behavioural change through the sending of price signals, a new report from McKinsey highlights the reality that the sector business models may need to change.Leaders in business, read the full article →

Climate & environmental issues are top global risks for 2020: Marsh & Zurich

For the first time in the history of the annual World Economic Forum's Global Risks Report all of the top five global risks in terms of likelihood are related to climate change and environmental issues.The report highlights the growing global awareness of the threat that climate related risks pose to read the full article →

Institutional investors backing ILS call for climate action

The world's largest institutional investors are increasingly vocal about the need to accelerate efforts to tackle the climate crisis, with many of the same group also contributing a significant proportion of the insurance-linked securities (ILS) market's capital base.Last week, 631 institutional investors which between them are responsible for managing more read the full article →

Goldman Sachs reiterates cat bond & ILS role in environmental policy

Investment banking giant Goldman Sachs published an updated environmental policy yesterday, with catastrophe bonds, insurance-linked securities (ILS) and other climate related risk and reinsurance products again taking a central stage within it.Goldman Sachs recognises the importance of climate adaptation and the opportunity for its business in this area, with its read the full article →

Climate threat needs capital response, but industry has to give it confidence

The economic consequences of climate change may prove particularly severe for insurance and reinsurance companies in the property and casualty (P&C) space, presenting both a threat and an opportunity, but the latter may require access to capital to take full advantage of it.Recently, rating agency Moody's reiterated its stable outlook read the full article →

Global Parametrics gets Hannover Re backing for new risk transfer fund

Global Parametrics, the parametric and index-based disaster risk transfer company, has launched a new natural catastrophe focused investment fund that has received backing from global reinsurance firm Hannover Re and the German government.Working with the German Federal Ministry for Economic Cooperation and Development (BMZ), the German Development Bank (KfW) and read the full article →

Climate change adaptation financing can benefit from partnership with ILS

Climate change adaptation projects and the need for them are rising up the agenda, as a recent surge in damages from severe weather and climate related catastrophe events concentrates the mind on the importance of investing in this area.Public authorities are showing renewed and increasing interest in climate adaptation, while read the full article →