ILS: simple, powerful, and accessible for all

“Insurance-linked securities (ILS) offer a good alternative or complement to reinsurance, and nothing complicated,” said Kirill Savrassov, convenor of the ILS Education Programme, lamenting how ILS has often been viewed as a niche product reserved for sophisticated markets or large financial institutions. 

“For developing countries ILS instruments such as sovereign parametric catastrophe bonds, are often the only viable way to provide immediate post-disaster response, while use of ILS techniques such as collateral trusts is the only way for local insurers and reinsurers to take an equal part in the global reinsurance market,” Savrassov explained, quick to dismiss the notion that ILS was a complex subject for those outside the financial elite. 

Savrassov and his partners are passionate educators in the ILS space who believe that sometimes it is perceived as overly complicated or even alien.

“There is nothing unusual about ILS, and it won’t take ages to gain an understanding of it and start using it,” he said.

He is persuaded that ILS provides a means to transfer risk effectively, offering essential financial protection. 

Yet, despite its potential, the uptake of ILS in developing countries remains slow, and Savrassov argues that education is key to overcoming this barrier.

The ILS Education Programme, which started in 2021, comprises three online cohorts a year, a five-day in-person Swiss summer school and an on-demand corporate training in ILS. Savrassov was keen to point out it caters for experienced professionals as well as newcomers. 

“We offer the only independent executive ILS education available for industry practitioners. Our curriculum is constructed based on demand from various stakeholders from different backgrounds—whether asset managers, reinsurers, or disaster risk management officials.

“Each has a different perspective on ILS, and it’s crucial to maintain a balance of interests.”

This balance is central to Savrassov’s approach. By bringing together diverse professionals—each with their own needs and priorities—the programme fosters a broader understanding of ILS, not just from the perspective of their own sector, but also from the viewpoint of their counterparts in other industries. 

“Participants gain a thorough understanding of ILS as a dynamic, evolving asset class” 

For asset managers, ILS represents an uncorrelated, high-yield investment class. For reinsurers, it is an alternative to classical reinsurance structures. For disaster risk managers, it offers a blanket disaster risk transfer solution at the sovereign level. 

By catering to each of these groups, Savrassov’s programme offers a comprehensive foundation in ILS, which newcomers and veterans can both build on. 

“For newcomers, the course builds a clear understanding of the framework of ILS, while for experienced practitioners, it allows them to view ILS through the eyes of their counterparts—be they asset managers, sponsors, or disaster risk managers.”

These efforts to educate the sector on ILS have not gone unnoticed—the programme was shortlisted for the 2023 Trading Risk “Initiative of the year” Award, and was among finalists at the 2023 and 2024 AXCO Global Insurance Awards in the “Training initiative of the year” category. The Swiss summer school project has been nominated for the coming Swiss Insurance Innovation Award in 2024.

Real-world education

Savrassov highlighted the practical nature of the course, noting the involvement of leading industry figures. 

“Alongside the theoretical information, we have practitioners delivering live presentations, and each block of knowledge ends with the input of a market practitioner actively working in the field,” he said. 

This blend of theory and real-world application ensures that participants gain a thorough understanding of ILS as a dynamic, evolving asset class. 

“We supply our participants with solid knowledge of the topic, and with resources and potential steps to develop ILS within their own organisations,” he said. 

One review from the course website reads: “This is an outstanding class hosted by leading ILS practitioners. I was in the first cohort, and use what I learned every day. I highly recommend this programme.”

Savrassov believes that ILS education is vital for developing as well as developed markets. 

While the US remains the largest market for ILS, other regions—including parts of Europe and Japan—are also notable players. 

However, in many developing nations, ILS instruments remain underutilised, despite their potential to offer immediate financial protection after disasters.

“For some countries, the use of catastrophe bonds isn’t just one of several risk transfer options—it’s the only viable way to access fast post-disaster finance.”

Savrassov is clear on the need to continue pushing for ILS education in these regions, stating: “It’s not only a philosophical question of educating developing countries; it relates directly to their ability to respond to big natural catastrophes.”

For Savrassov, the message is simple: ILS is an essential instrument that can be used effectively by anyone, regardless of background. 

“Don’t be afraid of ILS,” Savrassov concluded. “Learn about it, use it—and it’s a win-win for everyone involved.”

Kirill Savrassov is a convenor of the ILS Education Programme operated by Phoenix CRetro. He can be contacted at: k.savrassov@phoenix-re.co.uk  

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