Convergence: Industry needs better understanding of nat cat event frequency
The ILS market must get better at understanding natural catastrophe event frequency, according to a panel at Convergence 2019.
There has been a tendency for some market participants to get a little sloppy, said Mike Millette from Hudson Structured Capital Management, forgetting that catastrophe events occur or assuming they are rarer than they are.
The ILS market needs a better grasp of event frequency, stressed Millette, which will help measure and assess climate change. He highlighted the fallibility of anecdotal evidence, noting that in the past people underestimated the frequency of hurricanes hitting Florida.
Many institutions and investors want improvements in the ILS market to be constant, said John Seo from Fermat Capital Management. Industry participants must always be as up to date as possible, he warned, or risk clients taking their business to competitors.
The panel agreed that the ILS industry, like the wider re/insurance industry, must take risks, but must properly understand the risks it takes, and correctly assess their potential impact and frequency.
The panel, entitled Why ILS Matters More than Ever Before...For Everybody, also included Eveline Takken-Somers from PGGM, Craig Dandurand from Future Fund and Michael Stahel from IGT ILS Partners. It was moderated by Richard Lowther, formerly of Hiscox Insurance Linked Strategies.