risk transfer

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.

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.

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.

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.

Having already developed the first parametric insurance policy to insure and enhance the resilience of a coral reef section of the Mesoamerican Reef in Mexico, The Nature Conservancy (TNC) is now looking to expand the product’s reach into Florida and Hawaii.

Mark Carney, the Governor of the Bank of England, discussed the role of insurance and reinsurance technology as an essential financial took to smooth the world’s transition to a 1.5 degree world and highlighted the role of insurance-linked securities (ILS) within that.

A newly launched Coalition for Climate Resilient Investment is set to bring together significant investment and risk industry expertise, with goals including to properly price climate risk, align investment flows with resilience initiatives and to introduce resilience bonds.

More granular and higher resolution satellite data from earth observations are set to improve weather and catastrophe event insights for the insurance, reinsurance and insurance-linked securities (ILS) industry, according to the CEO of Orbital Micro Systems.

Rating agency A.M. Best warned of concerns that insurers may over-estimate the benefits of recently passed legislation to reform the assignment of benefits (AOB) system in Florida in their pricing.

The legislative bill designed to reform the assignment of benefits (AOB) system in Florida could benefit the catastrophe bond market, with loss development potentially rationalised thanks to reduced litigation and enhanced claims disclosure, lawyers at Cadwalader, Wickersham & Taft LLP explained.