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Member, Beacon International Group, Ltd.
Swiss Re has called for the establishment of a pan-European body to collate claims data for the insurance industry.
The reinsurance giant believes that the existence of a continental body akin to the U.S. Property Claims Service will increase the transparency of industry losses, and facilitate the growth of the catastrophe bonds, or insurance-linked securities, market.
"Industry loss indexes are key to unlocking additional capital market capacity for European insurers. With industry-wide support, this initiative can expand the traditional reinsurance and capital market solutions available to European insurers," said Swiss Re's Philip Lotz, chief executive officer of capital management and advisory.
According to the company's report published yesterday, "a key development in 2006 was the widespread use of industry loss indexes as bond loss triggers for US exposures. In Europe, a similar development has been hindered by the lack of an effective market loss index."
Swiss Re said that the insurance-linked securities market has grown "significantly" across the globe. Last year saw a 130% increase in the issuance of catastrophe bonds. This brought the total outstanding catastrophe bonds to $8.1 billion, including European windstorm bonds worth in excess of $1 billion. At the same time, industry loss warranties have also grown for U.S. natural catastrophe exposures and now exceed $4 billion.
Swiss Re believes that such a body will also benefit the industry by improving benchmarking, underwriting and exposure management.
Swiss Re's report, "Market loss index for Europeexpanding capital market capacity" is available to download at: www.swissre.com/INTERNET/pwsfilpr.nsf/vwFilebyIDKEYLu/ULUR-6XHH5L/$FILE/Publ07_FR_Market_loss_Europe.pdf