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ILS market remains resilient amid uncertainty

2020 Global Insurance-Linked Securities Market Survey Report

Insurance Consulting and Technology|Investments|Reinsurance|Insurance Linked Securities|Securities|Risk & Analytics
Insurer Solutions

January 12, 2021

Further growth is expected for insurance-linked securities despite recent tests and ongoing challenges.

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
82% of end investors intend to increase or maintain ILS allocation in the next 12 months.
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.
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