The increasing diversity of risk transfer instruments and reinsurance capital sources, including insurance-linked securities (ILS), is a credit positive for the U.S. property and casualty (P&C) insurance sector that faces an evolving risk landscape and rising secondary peril losses, according to rating agency KBRA.
Insurance markets faced by severe and more frequent weather events have seen the most dramatic changes in the risk sharing dynamic between insurers and reinsurers, KBRA explains.
While major hurricanes have often been deemed the most significant threat to insurer profitability, rising industry losses from secondary perils such as severe convective storms (SCS) are now high on the agenda.
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