Consistent with how the ILS market evolved risk transfer for catastrophe (CAT) risk, a "win-win" scenario exists for non-CAT property lines as carriers are able to diversify their sources of capital and investors can take advantage of a larger pool of risk that is not correlated with the financial markets. (Credit: Jirapong/Adobe Stock)
The size of the global property insurance market is estimated to be $450 billion by annual premium, but only a small fraction of this exposure makes its way into the insurance-linked securities (ILS) market. Capital markets investors are missing the expected return and potential diversification benefits from a large swathe of the property insurance market. Consistent with how the ILS market evolved risk transfer for catastrophe (CAT) risk, a "win-win" scenario exists for non-CAT property lines as carriers are able to diversify their sources of capital and investors can take advantage of a larger pool of risk that is not correlated with the financial markets.
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