An Analytical Study of Insurance-Linked Securities as a Substitute for Conventional Reinsurance
No Thumbnail Available
Files
Date
2025-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
National Law University and Judicial Academy, Assam
Abstract
This paper assesses the viability of Insurance-Linked Securities as a potential alternative to
traditional reinsurance. For many decades, reinsurance has been one of the most crucial tools
employed by the global insurance market for managing large-scale risks as it helps the insurers
to manage risks and stay financially sound. However, with ever-increasing complexities and
calamities, in addition to capital market involvement, ILS has emerged. These securities, which
enable the insurance industry to transfer risk to capital markets, have grown significantly in
recent years, but their viability as a long-term alternative to reinsurance remains uncertain.
Based on doctrinal research, the paper explores the development of ILS, including the structure
and future potential. It compares them with a well-established role of reinsurance in risk
management. While ILS offer several distinct advantages in terms of access to a broader
capital market and more flexible risk transfer structures, they are not without significant risks
and challenges. The research starts to investigate the structure, forms, and operations of ILS,
such as catastrophe bonds, collateralized reinsurance, industry loss warranties (ILW), and
reinsurance sidecars. They enable insurers and reinsurers to tap into capital markets to shift
risks that were once held within the insurance industry. The dissertation creates a comparative
review of ILS and conventional reinsurance, noting the ways in which ILS can improve capital
efficiency, diversify risk, and stabilize the insurance market after a catastrophe.
Description
Dissertation submitted to National Law University and Judicial Academy
in partial fulfilment for award of the degree of
MASTER OF LAWS/
ONE YEAR LL.M. DEGREE PROGRAMME
Supervised By
Dr. Monmi Gohain
Assistant Professor of Law
Submitted By
Shikha Madheshiya
UID SF0224029