The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
BREXIT: The UK is leaving the EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For guidance, see Practice Note: Brexit—impact on finance transactions—Brexit planning and impact—financial services, Brexit—impact on finance transactions—Key issues for securitisation transactions and Brexit—impact on finance transactions—Derivatives and debt capital markets transactions—key SIs.
Insurance-linked securities (ILS) are a form of risk management for insurance and reinsurance firms.
Insurers routinely manage their exposure to risk by entering into an arrangement in which:
the insurer retains its direct liability to its policy holders, but
receives amounts corresponding to part of the premia paid by policy holders to the insurer, and
is liable to pay amounts to the insurer which correspond to an agreed proportion of losses incurred by the insurer
This is also referred to as risk mitigation or risk transfer.
The most common form of insurance risk management is reinsurance, where the insurer enters into a reinsurance agreement with another insurance company which specialises in reinsurance. A reinsurer may itself reinsure all or part of the risk that has been transferred to it. This is called ‘retrocession’ rather than reinsurance. The reinsurer of a reinsured risk is called the ‘retrocessionnaire’.
ILS are a form of risk management in which:
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234