Insurers downplay ART role

The present and future presidents of the Risk and Insurance Management Society (RIMS) downplayed expectations that the hard insurance market will lead to a growth of capital market insurance structures, often called alternative risk transfers (ART).

David Mair, RIMS's current president, told a press conference on Tuesday at RIMS's annual conference, that he is pessimistic about the ability of the capital markets to become a significant source of insurance risk finance.

“The capital market structures we have seen to date have been generally disappointing,” said Mair. “The capital markets are looking for the same kind of profit margins as the insurance companies, so I don’t think it will become an efficient way for companies to source their insurance risk.”

Christopher Mandel, who becomes RIMS’s president on May 1, said: “I don’t think there will be an exponential growth in capital market insurance structures, even though the insurance companies are in many cases demanding unreasonable increases in premiums.” Mandel added that he thought the greatest growth in insurance financing would be in multiple-partner captive structures.