Common ILW Contracts and Market Dynamics
The benchmark contract for the market for a number of years around Hurricane Katrina was $20bn US Wind and Quake. A number of other US Wind and Quake zones as well as Japanese Quake and European windstorm and various second event coverages also trade in the market.
Many catastrophe bonds are triggered by industry-based triggers and trade with reference to pricing in the ILW markets.
These contracts are often negotiated directly between parties. In addition, brokers including Willis and Access Re publish estimated bid and offer levels and attempt to arrange trades. Catastrophe bond traders including Swiss Re and Goldman Sachs have indicated their intention to trade these instruments.
Read more about this topic: Industry Loss Warranty
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