Insurance Securitization: The Development of a New Asset Class

This paper provides an introduction to the insurance securitization process and its products. Insurance securitization is considered within a broad context, both as a subset of financial securitization, and as one of many sets of financial risk management tools available for use by insurers. A definition of insurance securitization is presented, and a description of the evolutionary process which securitization -- both insurance and non-insurance -- has undergone is provided. The factors that have led to the development and expansion of insurance securitization are discussed and examined, and various securitized products are described. Particular attention is paid to several recent successful catastrophe bond offerings, which have received significant publicity. The paper concludes with a discussion of the future of insurance securitization.