Reinsurance News

Lloyd’s agencies back alternative capital expansion: LMA survey

16th August 2018 - Author: Matt Sheehan

An overwhelming majority of Lloyd’s managing agents support the continued use of alternative capital in the re/insurance market and believe that insurance-linked securities (ILS) transactions will expand beyond natural catastrophe risks, according to a survey by the Lloyd’s Market Association (LMA).

Lloyd's of London insurance and reinsurance marketThe LMA’s poll of senior executives from 25 managing agencies found that 80% would like to see ILS products become a permanent fixture in the re/insurance market, while 88% would like to see London leverage its underwriting expertise to gain access to currently uninsured risks using ILS capital.

100% of respondents also said they believed that ILS transactions will widen to cover more risks, such as cyber and legacy business, in the next three years.

Additionally, more than two thirds of managing agents said they could see a potential use for the new UK ILS framework in the next 12 months, while 60% would like to see Lloyd’s Central Fund diversify its sources of capital through ILS.

However, 36% of respondents also suggested that Lloyd’s framework will need to change to accommodate more use of ILS.

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“This research shows that market participants are extremely supportive of increasing the use of ILS generally, and doing so at Lloyd’s in particular,” said Ken Curtis, LMA Director of Finance and Risk.

“The new UK framework has already been tested by a Lloyd’s syndicate, and the market will explore ways to make future transactions even simpler and more efficient,” he added.

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