Unanimous vote: ILS deals will expand to cover more risks in next three years

Survey showcases that Lloyd’s agencies want ILS to become a permanent fixture

Unanimous vote: ILS deals will expand to cover more risks in next three years

Insurance News

By Terry Gangcuangco

It looks like Lloyd’s of London managing agents are sold on the idea behind insurance-linked securities (ILS).  

A survey by the Lloyd’s Market Association (LMA) found that not only do 80% of polled agencies want to see ILS products become a permanent fixture in the (re)insurance market, but 100% believe such deals will widen to cover more risks in the next three years.  

These risks include cyber and legacy business.

The poll, which the LMA said was a follow-up to an event it held with Vario Partners, also showed that more than two-thirds think there’s a potential use for the new UK ILS framework in the next 12 months. In addition, 60% are keen on the Lloyd’s Central Fund diversifying its capital sources through ILS.  

Meanwhile a significant percentage (88%) would like to see London leverage its underwriting expertise in order to gain access to currently uninsured risks using ILS capital. Also, 36% are of the view that the Lloyd’s framework will have to change to accommodate more applications of ILS.

“This research shows that market participants are extremely supportive of increasing the use of ILS generally, and doing so at Lloyd’s in particular,” noted LMA director of finance and risk Ken Curtis.

He said: “The new UK framework has already been tested by a Lloyd’s syndicate, and the market will explore ways to make future transactions even simpler and more efficient.”

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