Insurance-linked securities (ILS) are a way to access additional
financial protection outside the traditional insurance and
reinsurance providers, typically through capital markets. ILS are
most commonly associated with catastrophe bonds providing
reinsurance cover in the event of significant natural
catastrophes.
Cyber risk is one of the most discussed new areas of risk for
the insurance industry to address. As a relatively new exposure,
the development of cyber insurance solutions presents a range of
challenges, including specific challenges for those seeking to
offer ILS solutions.
Catastrophe risks and ILS
ILS have made considerable progress within the catastrophe
reinsurance market, in part because there is a degree of consensus
on the way in which the risks can be modelled. This level of
consensus has arisen as data relating to past catastrophes has been
analysed and knowledge shared across the market. Therefore,
investors in ILS can have some comfort in
