Insurance Linked Securities interest in terrorism (re)insurance, cyber terrorism issues and non-damage business interruption cover following a terror event all hot topics at this week’s International Forum of Terrorism Risk (Re)Insurance Pools (IFTRIP)
Connecting capital markets to reinsurance risk was one of the key topics discussed at the recent annual IFTRIP conference in Brussels. It was clear that investors see terrorism cover as a useful but complex diversifier for ILS funds. Speaker Florian Steiger, Cat Bond Strategy Lead at Twelve Capital, suggested that terrorism cover might reach up to 2-4% of investment portfolios as investors look to diversify away from pure natural catastrophe risks. For further growth of terrorism coverages in catastrophe bonds, excellent modelling and better understanding of the risk would be the most important next steps to get investors truly comfortable with the risk, according to Steiger.
As part of a packed agenda, delegates also considered cyber terrorism and the issues for the global reinsurance pools, each of which take different approaches but are looking to collaborate further on how to respond to and how to define cyber terrorism. In a lively debate, it became clear that the commercial market’s views are split between those who believe that cyber more generally is uninsurable and that some form of pooling and even government intervention is necessary and those who consider it vital to model and meet this emerging challenge as a private market.
There was significant interest in Pool Re’s recent launch of non-damage business interruption cover, as delegates discussed the need for the industry to think more about the impact of business interruption. This is particularly the case for SMEs who are often unaware of how the cover works or how it could benefit them, as evidenced by the aftermath of the London Bridge and Borough Market attacks in 2017.
Julian Enoizi, Secretariat of IFTRIP and CEO of Pool Re, commented: “The conference’s discussions covering propositions and cover, cat bonds, modelling and technology, cyber as well as the perspectives of customers, insurers, victims and brokers were fascinating and revealing. Given the growing worldwide threat from terrorism and its effects, these issues are rightly top of the agenda and this opportunity to share expertise and understanding at IFTRIP is unparalleled. I am already looking forward to continuing our conversations at the next meeting in Washington DC in June 2020.”
This year’s conference was the largest gathering of international terrorism reinsurance pools, insurers, reinsurers, security specialists, academics and thought leaders in the industry, with close to 200 attendees.