Page 68 - RISK Management IC86 Ebook
P. 68
Risk Management
Capital markets products - insurance securitiza
tion and insurance derivatives
n Enhancing traditional reinsurance and alternative risk financing
structures with such alternative risk transfer structures as
insurance securitization and derivatives enables insurance
companies to access the capital markets as additional capacity
providers.
Insurance securitization and derivatives are tools that transfer
insurance risk in an insurance bond or derivative format to
capital market investors, rather than to the reinsurance market.
Insurance derivatives enable investors to assume insurance
risk by way of an unfunded capital market instrument in the
format of options or swaps.
Insurance securitization and other techniques of risk transfer
to the capital markets have been in use now for more than
four years as a means of covering insurance risks and as
tools for additional and alternative capacity if sufficient risk
capacity is not available in the traditional market.
Different types of risk financing alternatives to insurance
companies
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