ILS market remains resilient amid uncertainty

Willis Towers Watson’s 2020 Global Insurance-Linked Securities (ILS) Market Survey Report offers a unique view of the ILS market given it tracks the perspectives of the various ILS market constituents:

• End investors
• ILS funds
• Insurance and reinsurance companies
• Corporate risk managers

Figure 1: Snapshot of the views of the ILS industry

82% of end investors intend to increase or maintain ILS allocation in the next 12 months. The average portion of a portfolio that ILS funds allocate to retrocessional reinsurance has increased from 25% to 37% since our 2018 survey. 60% of survey respondents think market growth will exceed 10% in the next five years. More North American companies access ILS capacity than their international counterparts (63% vs. 53%). One-third of corporate risk managers surveyed expect to use ILS in the next three years.

Looking ahead

• Market participants remain loyal to ILS, with measured optimism about the future after recent upheavals. Harness the positive experience.
• Appetite for new categories of risk exists, albeit with discrepancies about cyber. Bring the right investors to the right risks.
• Transparency and ESG (environmental, social, governance) credentials are becoming relatively more important to investors. Funds and capacity users take note.
• Many corporate risk managers have a thirst for greater knowledge about ILS. Satiate that thirst.