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Succeeding years of nat-cat losses have left aggregate and lower-layer capacity tighter. -
The segment’s lustre has been dulled by losses and capital trapping.
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Investors, fund managers and service providers are adapting in the face of potential large losses from secondary perils.
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Beyond pandemic exclusions, there has been a mixed response to changing ILS terms after the trapping issues.
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Rates have climbed 20%-35% since 1 January, and 40%-50% year on year, sources estimated.
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Reinsurers secured concessions on terms and hiked rates as most insurers managed to patch together cover to enter hurricane season.
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Cat bond spreads settled 11% above sponsor targets as many deals were scaled back or parked.
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Industry association FAIR said a full reinsurance backstop should be provided.
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Major ILS providers active in Florida including Nephila and Aeolus lifted assumed premiums.
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Sources close to the industry are calling for litigation reform as a priority, while Florida Hurricane Catastrophe Fund expansion is also on the cards.
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Several firm-orders have been released, but there are widespread expectations of a much-delayed renewal as low-layer capacity remains elusive.
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Despite a move away from non-official indices, global ILW trading is still sometimes relying on a patchwork of triggers.
