Insurance and the capital markets

Abstract

Disintermediation with respect to the transfer of insurance risk is still very much a market in development, unlike in banking where risk transfer to the capital markets through securitization has become a widely used financial technique. Reinsurance will continue to play a dominant role, but gradually we see how innovative securitization instruments are brought to the market, in non-life and in life. The main issues to overcome to make securitization a more widely used financial technique are the lack of transparency and consistency in modelling insurance risks. Enhanced standardization and liquidity will be crucial for the success of insurance risk securitization. © 2007 The International Association for the Study of Insurance Economics.