Interest in Alternative Methods of Hedging Casualty Risk Increases

By Joseph M. Izzo  |  July 15, 2013

The insurance-linked securities and industry loss warranty (ILS/ILW) market for property catastrophe hedging is well defined and robust, but in the casualty space, the concept is still in its infancy. Interest in alternative methods of hedging casualty risks has grown since our first (March 2011) release of the ISO Casualty IndexTM. I point as evidence to the Casualty Actuarial Society’s Seminar on Reinsurance that took place during early June in Bermuda. There were several sessions about ILS/ILW. Specific to the casualty space was the session titled “Hedging Casualty Risk through Index Products.” Some industry analysts reportedly are developing articles on this topic for future publication.

As I mentioned in an earlier blog, the index lends itself to new and innovative uses within the capital markets space. We believe the product can help manage adverse casualty loss experience by giving you information you need to transfer risk to the capital markets.

Our latest release occurred on June 21, 2013, and we expect our next one on or about August 31, 2013. Visit our blog soon after for more insights from the index and for information on new research regarding the use of ILS/ILW for casualty risk.

Joe Izzo

Joseph M. Izzo is senior vice president of ISO's Data Assets and Analytics Department. Mr. Izzo has more than 28 years of actuarial and data management experience. His division is responsible for various products and services related to ISO’s commercial lines insurance programs.