For some risks there is no obvious market. The risk class may be deemed “toxic” by the industry, or it may be an entirely new or unique peril. There may be moral hazard issues, regulatory or legal risks that are too hard to quantify.
In such circumstances, there may still be other avenues worth exploring. At Inscap, we work with carriers worldwide who are accustomed to underwriting unique and unusual risks. Depending on how well the parties’ interests are aligned, there may be scope for developing a structured agreement which finds a middle ground between the risk transfer requirements of the client and the carrier’s need for caution. These customized solutions are often referred to as “alternative risk transfer” (“ART”). In addition such agreements could make use of derivative contracts, securitization techniques and other more innovative features.
The growing importance of alternative reinsurance capital, provided via insurance-linked-securities, hedge-fund reinsurers, collateralized reinsurers, alternative asset managers and other new capital sources provides a much expanded range of risk transfer and risk management options.
Examples for our advisory services in these areas are:
- Design, modelling, pricing and placing of innovative reinsurance structures
- Structured Reinsurance, prospective and retroactive
- Risk analysis for ILS investors
- Capital relief reinsurance