Third Party Capital - the end of insurance as we know it?

26 June 2014

The Insurance Institute of London's Young Members' Committee, in association with Lloyd's, held the second of its 2014 Educational & Networking Programme events to an audience in Gallery 11 at Lloyd's on 26 June. The presence of alternative risk capital (ARC) has been growing significantly in recent years. ARC contracts include catastrophe bonds, collateralised reinsurance, industry loss warranties, contingent capital, and sidecars. This market is now estimated to total over $50 billion, with predictions that this could increase to over $100 billion.

Some argue that the industry’s ability to access deeper pools of capital is an innovation that is good for capital providers, insurance consumers and the industry itself, whereas the alternative view point is that an abundance of capital in the market, much of which is seen as potentially temporary, leads to rating that is not sustainable in the long term.

Consideration was given by Professor Alan Punter, Visiting Professor in Risk Financing, Cass Business School, City University, as to whether ARC is simply a “soft” market phenomenon, or whether there has been a fundamental shift in the relationship between capital and underwriting which is here to stay in the “mainstream” of our market. He personally believed it was here to stay and that members should learn to embrace it.

By the end of this lecture members will have gained an insight into:

the main types of ARC in the current market
their key features
how they have developed
the key players

Listen to the audio and download the presentation (pdf) here

Visit to Plowden & Smith

Educational visit to Plowden & Smith on Friday 6 June 2014 This 2.5 hour visit offered a behind the scenes look at how a leading UK and world specialist in the conservation and restoration of the fine and decorative arts uses its insurance and risk management policies to help support and maintain its reputation as an internationally recognised company.

Visit to Cory Riverside Resource Recovery (Cory RRR)

Educational visit to Cory RRR on Tuesday 1 July 2014. This 2 ½ hour visit offered a behind the scenes look at one of the UK’s most efficient energy recovery plants, which currently processes approximately 16% waste from households and businesses in central London. The Belvedere plant is an example of a robust, clean, highly automated and efficient facility that recycles waste and converts it into generating electricity