European insurers are increasingly revisiting aggregate catastrophe cover to protect against high-frequency events, with alternative capital providers showing greater interest in supporting these structures, according to Hamish Dowlen, Managing Director and Head of EMEA at Gallagher Re.Dowlen spoke to Artemis about the renewed demand for frequency protection across Europe, the evolution of reinsurer strategies in response, and how insurance-linked securities (ILS) markets are identifying aggregate structures as an area of growing opportunity, particularly as cedants grapple with elevated retentions and a multi-peril environment.“Increasingly, we’re having conversations with clients who say: if the frequency in any one year gets to a level where we’re having to retain that kind of per-event loss again and again, then we’re very interested in buying something that will cap that,” Dowlen said.He noted that the supply of aggregate capacity had declined in recent years, but market conditions are shifting.

“In the last few years, a lot of those aggregate covers fell by the wayside, either because the structures were no longer sustainable, or the pricing wasn’t at a level that cedants found acceptable.But now, we’re in a situation where the market has become a little more flexible.We’ve identified solutions that are placeable.” While the resurgence in demand spans much of the continent, the German-speaking markets remain a focal point.

“Germany, Austria, and Switzerland traditionally bought more aggregate cover than other European markets.So they’ll be particularly interested in what’s available going forward,” Dowlen explained.Asked about ILS involvement in these structures, Dowlen confirmed a growing role for alternative capital.

“Yes, we absolutely do see growing interest.I think all reinsurers, both traditional and ILS, are assessing where they want to play in the European markets, and aggregate is an area where they see the chance to differentiate themselves.” While he does not expect ILS to dominate, Dowlen sees it as an important complement.“I don’t believe ILS will become the dominant force in the European aggregate market, but I do think there’s an opportunity for it to play a greater role.

I expect that will grow over the next few years.” He also stressed that traditional capacity remains active and committed.“There’s still a lot of traditional capacity out there from European reinsurers, as well as from Bermuda and London.Those reinsurers are very keen to participate on a traditional basis.” Dowlen added that reinsurers are rethinking how best to support clients in today’s risk environment.

“Reinsurers are starting to look at how they can be more relevant to clients in Europe, how they can be meaningful to them and address the additional concerns they’re facing,” Dowlen concluded...All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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