Traditional way of issuing insurance policies exposes the insurance companies to the contract-related risks. In contrast, using common financial instruments in the insurance industry such as ILS, transfer the industry risks to the buyers of these securities and bonds eventually helping the insurance companies to offer coverages for the present risks in the economy. If commonly used, these instruments can help people to access financial markets and this will adjust the insurance prices based on the market mechanisms. Across the world, the international insurance companies have developed various kinds of ILS’s in order to use their full capacity.

Given the significance of the financial instruments in the insurance industry, the Macro Insurance Studies of IRC, have prepared a research report entitled “Common Financial Instruments in the Global Insurance Industry”. Written by Dr. Mohsen Ibrahimi, Advisor to SILO and Sajjad Farazmand, IRC research fellow, the report reviews insurance-related financial instruments, various types of ILS’s in non-life and life lines, and global ILS market, according to Public Relations Office, IRC.  

According to the report, insurance companies across the world, attempt to create a bond for each risk that exists in the insurance industry and accordingly, they are able to transform the present insurance industry risks into manageable risks in the financial market.

The statistical data indicate that the largest ILS market exist in the U.S. and despite the pandemic, turmoil in the financial markets, natural perils, and economic risks in recent years, ILS has been widely used by the insurance companies across the world.

If interested to download and read the Persian full text of the aforementioned research report, you can access it by clicking on the following link: http://www.irc.ac.ir/fa-IR/Irc/4946/Articles/view/14643/1475.