Solvency II to increase reinsurance11 Dec 2018 20:45
Standard & Poor’s (S&P) feels certain changes will likely result in an increased demand for reinsurance, which should result in a rise in the use of ILS solutions across the continent.
The longevity reinsurance market is poised for rapid growth according to industry experts and analysts, as the growth witnessed in the U.K. is predicted to spread to the U.S., Canada, the Netherlands and beyond.
And, as highlighted by S&P, certain longevity products will demand higher capital requirements under Solvency II, revealing an opportunity for ILS, cat bonds and other alternative risk transfer mechanisms to offer additional capacity and grow its support of the transfer of longevity risks.
Increased capital retention requirements will likely drive European reinsurers to further diversify their risk portfolios, seeking new, innovative, bespoke structures and solutions to take advantage of the geographical and peril diversification the ILS space can offer.
According to S&P as reinsurance becomes fully recognised under Solvency II regulations its demand from European entities will rise, which, we at Artemis feel will likely result in a rise in the use of ILS, and alternative risk transfer solutions, an element of the global reinsurance space that has been developing and expanding at a fairly rapid pace in recent times, without the need for higher capital retention guidelines.
http://www.artemis.bm/blog/2015/10/20/solvency-ii-to-increase-reinsurance-and-ils-demand-in-europe-sp/