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Promoting sustainable economic development: The role of insurance-linked securities

09:00 Thu 13 Jun 2019

Singapore

Climate-related catastrophes are occurring more often and with greater severity. While the impact of these disasters is gravely felt in all parts of the world, it is often the poorest populations, largely in emerging markets, that suffer the greatest consequences. Emerging economies, which often have sizeable infrastructure funding gaps, also bear the weight of myriad geopolitical and legal risks. Despite the expansion of initiatives such as China’s Belt and Road, the benefits of such projects can be quickly undone in the event of terrorist activity, military conflicts and other instances of political instability. Encouraging meaningful private-sector involvement in such initiatives and in the battle against climate change is a challenge for all economies. One way to help address these issues is the increasing uptake of risk-transfer mechanisms such as catastrophe bonds and other insurance-linked securities. These can facilitate quick financing in the aftermath of climate disasters and are a natural extension of historical trends in the insurance industry. OMFIF is convening a group of global public investors and market practitioners to discuss the growth of the insurance-linked securities market.