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.
Industry experts have again emphasised the importance of speed to market if London is going to develop a competitive insurance-linked securities (ILS) framework, but expressed varied thoughts on what impact Brexit might have on the UK’s ILS ambitions.
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The UK’s Financial Conduct Authority (FCA) has launched a consultation on changes to the FCA Handbook to incorporate its supervisory oversight of the UK’s new insurance-linked securities (ILS) regulatory regime.
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International law firm Ashurst has provided some feedback and commentary on the UK government’s proposed insurance-linked securities (ILS) framework, highlighting potential areas HM Treasury and the Prudential Regulation Authority (PRA) should take into consideration to ensure a competitive regime.
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Failure from the London marketplace to create a competitive insurance-linked securities (ILS) regime will be a “massively missed opportunity” that will most likely see another jurisdiction fill the void, according to Des Potter, Head of GC Securities, EMEA.
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Analysis and accompanying reports from ClimateWise stress the need for the insurance industry to do more to close the $100 billion annual climate risk protection gap, which, presents an opportunity for the insurance, reinsurance, and insurance-linked securities (ILS) space to improve protection and resilience.
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Simon Kirby, Economic Secretary to the Treasury (City Minister) at HM Treasury, has stressed that the UK government’s proposed insurance-linked securities (ILS) regulations can help the London insurance and reinsurance market maintain its competitive edge.
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Insurance solutions enhance the financial response capacity of countries in the face of natural disasters, and more and more regions are showing a willingness to improve risk management and utilise ex ante solutions, according to Joaquim Levy of the World Bank.
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As the UK government continues to develop and advance its ambition of turning London into a global hub for insurance-linked securities (ILS) business, international law firms have highlighted some uncertainties and potential shortcomings of the new guidelines.
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Gregory Richardson, Chief Risk and Strategy Officer at Transatlantic Reinsurance Co. (TransRe), has underlined the potentially huge economic benefits of fully privatising risk, noting a need for governmental assistance and cooperation with the private sector.
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Insurance-linked securities (ILS) business is seen as a priority in a post-Brexit Britain by the new UK Government cabinet, and the new regulatory regime will be in place in the first-half of 2017, according to government speakers at an event in London this morning.
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