Can non-NatCat insurance-linked securities diversify risk?

A developing insurance-linked securities (ILS) market trend has resulted from the rise in non-life ILS that transfer risks outside of the natural catastrophe space. However, no particular type of “non-NatCat” deal has achieved the same widespread acceptance as NatCat deals. While non-NatCat innovation could open up enormous avenues for market expansion, flawed transactions leading to losses could give investors reason to question the stability and growth potential of the market.

These issues are complex, requiring creativity and coordination across the key participants on a non-NatCat transaction. This paper by Aaron Koch explains non-NatCat ILS. He also explores the potential types of non-NatCat transactions.

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