TAILORED PRODUCTS - PROPERTY

Industry practitioners and the news media have reacted to major losses with the same message – the market needs to both regenerate and access new reinsurance and retrocession capital. As a result, this post loss supply and demand imbalance has led to the creation of new products to complement traditional covers, examples being:

• Cat Bonds – Debt instruments used to securitize natural catastrophe risk
• Industry Loss Warranties (ILWs) – Reinsurance contracts with recognized industry loss triggers            
• Parametric Covers – Non (buyer) indemnity based triggers with clear specific external circumstances as loss triggers (e.g. wind speed)

We believe that it is sound practice to consider the structuring of existing UNL-based programs alongside new products, as above, in order to maximize the buyer’s cost effectiveness of protection.

For more information on ILWs – Specialty Booklet Property Catastrophe

The future…

“Overall there will be more emphasis on analysis and exposure tracking which will ensure that the traditional reinsurance market will no longer be capable of meeting the demand for all property catastrophe reinsurance protection on its own. 

New capital will offer support to the development of creative products and alternative solutions. The key to this will be how adeptly the traditional reinsurance is blended with the new structures.

The real commodity will be expertise and the specialist approach.”

Bill Adamson
CEO - Carvill America, Inc.