I recently had the pleasure of joining colleagues from across the world of insurance, technology and risk capital in attending the Insider Conference on InsurTech.
With another 3 months still to go, 2016 has already been quite an eventful year. The renewal season was kicked off with the pre-Rendezvous AM Best Reinsurance outlook. Some of the issues covered were woven like a red thread throughout the Monte Carlo Rendezvous, the Guernsey ILS roundtable and will certainly be discussed during other events such as the ECF in Luxembourg in November this year.
The OECD BEPS (Base Erosion and Profit Shifting) strategy 2015 is currently being rolled out globally. With many corporations in a preparation phase, the impact on the captive insurance market is starting to cause concern.
Man-made disasters, NAT-CAT, Reinsurance, ILS and Collateralised Reinsurance – how does all of this fit together?
There is no denying a constantly increasing trend of man-made disasters and NAT-CAT events both in frequency and severity. This can be seen in the charts taken from Swiss Re’s SIGMA 01/2016 publication for the year end 2015.
The round table discussion hosted by Business Insurance recently at the RIMS conference in San Diego reflects the current uncertainty around the soft insurance market and if and when that may change.
One of the speakers indicated that “the insurance market had the feeling of the start of a hard market” but added that “this is not what is going on”. Some experts believe there is so much anxious capital in the market now, that not even a major catastrophic event would change the willingness to invest in the insurance market. There is a promise of profit on investments and a reasonable degree of safety for the investment.
It looks like the insurance premium cycle is now looping in the soft market phase and the next premium rate increase is not even to be seen on the horizon.
With ILS (insurance-linked securities) heading into the London Market, every effort is being made to push the corporation tax legislation through in 2016. UK companies will then be able to make the most of the business opportunities on offer.
So, what is this ILS regulation and what makes it different from traditional (re)insurance?