The ability of insurance and reinsurance industries to manage a catastrophic event has been called into question by experts . Unprecedented events with a low - frequency probability but extremely high loss potential can cripple firms and economies , and while the likelihood of such an event is low , Risk Management Solutions CEO , Hemant Shah suggests insurance and insurance companies should be paying more attention to losses of this nature than they currently appear to be . We simulate events across perils that could cause well in excess of $100 billion in loss, and I think that is the kind of event the industry should be more mindful of, events deep in the tail,” explains Shah. With events such as these in mind , Shah suggests the insurers and reinsurers should consider the use of insurance - linked security ( ILS ) or catastrophe bond protection to achieve cost - effective cover ; precisely why the catastrophe bond protection was created 20 years ago .
The ability of insurance and reinsurance industries to manage a catastrophic event has been called into question by experts . Unprecedented events with a low - frequency probability but extremely high loss potential can cripple firms and economies , and while the likelihood of such an event is low , Risk Management Solutions CEO , Hemant Shah suggests insurance and insurance companies should be paying more attention to losses of this nature than they currently appear to be . With events such as these in mind , Shah suggests the insurers and reinsurers should consider the use of insurance - linked security ( ILS ) or catastrophe bond protection to achieve cost - effective cover ; precisely why the catastrophe bond protection was created 20 years ago .