The alternative capital market has shown itself to be both “relevant and reliable” following the series of heavy global catastrophe losses in 2017 and 2018, according to David Gibbons, insurance-linked securities (ILS) leader at PwC.
Speaking as part of a panel at PwC’s Insurance Summit event in Bermuda, Gibbons said that alternative capital now comprises “an increasingly large portion of the insurance and reinsurance market globally. And it’s a true form of capital that’s supporting a large part of the globe against significant disasters.”
The panel also included ILS industry leaders such as Jay Green, Managing Director at GC Securities; Richard Lowther, Chief Operating Officer at Hiscox Re Insurance Linked Strategies; and Laura Taylor, Managing Partner and Chief Financial Officer at Nephila Capital.
“After the tragic natural disasters in 2017 and 2018, the ILS market has been there to pay claims and there continues to be an influx of capital to back the renewals of these covers,” Gibbons noted.
He added that the ILS sector has also assisted in global humanitarian efforts surrounding natural disasters, pointing to examples such as the African Risk Capacity Insurance and the Caribbean Catastrophe Risk Insurance Facility.
“Parametric triggers combined with advanced data analytics and modelling allow the payment of claims at a far faster pace than traditional loss contingent covers so that money can be distributed as soon as it is needed after droughts, hurricanes or earthquakes,” he explained.
The ILS market currently stands at around $100 billion and panellists at the Summit in Bermuda noted that the host nation has the largest depository of ILS listings in the world, with more than 80% ($30 billion) of global capacity at September 30,2018, according to BSX figures.
“So far in 2018 there has been over $10 billion in catastrophe bond covers written, the ILS fund market stands at well over $100 billion, and expanding the definition of ILS to P&C and Life run off books, shows even more growth as both of these segments show the highest level of incorporations in the Bermuda market,” Gibbons continued.
In other news to come out of PwC’s Insurance Summit, the Premier of Bermuda explained that he would like to see the nation take the title of the world’s insurtech capital, while a panel of prominent Chief Financial Officers agreed that the growth outlook for the reinsurance industry is positive.
