Originally developed in 2010 by Guy Carpenter & Company, LLC as an index-based reinsurance contract issued by Bermuda-based hedge fund Nephila Capital Ltd., CWIL is now available to Marsh’s corporate clients with exposures in the United States and Europe.
“Earthquake and windstorm insurance coverage has traditionally been difficult and expensive to obtain for organizations with significant exposures, and that is only being exacerbated in today’s transitioning property catastrophe market,” said Quentin Hills, global head of Marsh’s Financial Risk Products Practice. “Working with Nephila and Guy Carpenter, Marsh has adapted the CWIL index-based solution to provide clients with access to dedicated capital that previously had only been available to insurers and reinsurers.”
Unlike other index-based insurance instruments that use total industry or state-wide loss figures to calculate loss payments, CWIL uses loss data calculated from Property Claims Services broken down to a county level. This enables companies to hedge their earthquake and windstorm risks at a more granular level allowing for a better match with their actual losses.
CWIL may be structured as a standalone solution or as a complement to an existing property program and provides meaningful capacity.
“Not only can CWIL be executed quickly, but accessing dedicated capital from Nephila also reduces an organization’s exposure to insurance market cycles and diversifies counterparty exposure,” Mr. Hills added.