Alternatives to traditional indemnity-based insurance products are often a more efficient use of capital and can be fine-tuned to meet the needs of the insurance buyer. These products can be purchased in addition to a traditional program or in lieu of a traditional setup.
There are various types of financial instruments whose values are driven by insurance loss events which can be linked to property losses caused by natural catastrophes and weather events. These types of solutions and products are obtained through Insurance-Linked Securities (ILS).
Insurance-Linked Securities allow investors to provide capacity, primarily on property catastrophe risks. Types of ILS arrangements include but are not limited to the following:
Parametric products continue to evolve and are being purchased throughout the country. A parametric product allows the insured to specify a limit and retention, and the post-event recovery is based upon the peril for which it was bought and its intensity level (e.g. Category 3 Hurricane wind speed threshold). These covers can be based upon wind, earthquake, rainfall, etc. Examples of how these can be designed include:
AmWINS’ Alternative Risk Group is able to provide clients with access to alternative capital that cannot be supplied via the traditional broker market. Access to these markets includes the ability to provide diversified sources of capacity and enhanced structural features that traditional markets have difficulty providing. We provide tailored solutions and have the market relationships to provide viable alternatives.
ABOUT THE AUTHOR
This article was authored by Holland Walls, Alternative Risk Broker with AmWINS Brokerage of Alabama.
Legal Disclaimer. Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
(c) 2017 AmWINS Group, Inc.