Posted on 19 Mar 2010
Several experts speaking at the 2010 Securities Industry and Financial Markets Assn. Conference in New York challenged the ILS sector to find innovations to expand its presence. Offering coverage for alternative perils, including casualty risks, could be the key to growing the insurance-linked securities sector, experts say.
"There is certainly demand for more diverse capital markets cover within the insurance industry," said Joel Aronchick, chief risk officer of Chubb Group of Insurance Cos., in Warren, N.J. Mr. Aronchick said capital markets coverage through catastrophe bonds should be expanded to address alternative perils, such as workers compensation and liability risks, and more geographic regions. Other cat bond enhancements, including new trigger structures, also would be attractive to insurers, he said.
Bill O'Farrell, chief reinsurance officer of ACE Group of Cos. in New York, said he would like to see catastrophe bonds address broader geographic coverage and “less peril-specific deals.”
As far as liability risks, Michael Millette, managing director and co-head of structured finance at Goldman Sachs & Co. in New York, said insurers may soon turn to the capital markets to transfer liability exposures. In addition, runoff business arising from insurance industry consolidation could be transferred to the capital markets, he said.