The insurance-linked securities (ILS) market is continuing to evolve beyond traditional catastrophe bonds, with growing issuance in cyber and parametric segments, reflecting efforts to close protection gaps and provide alternative risk transfer solutions, according to a new report from AM Best.
While indemnity-based catastrophe bonds still heavily dominate the market, AM Best highlights the rising use of parametric structures, particularly as cedents seek alternatives for risks that are difficult to place in the traditional reinsurance market.
In its latest ILS Market report, AM Best noted that the use of parametric triggers in 144A cat bonds is still modest at this point, with most primary insurer sponsors showing a strong preference for indemnity covers.
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