Timetric 's investor Patel warns that a rapid growth in the insurance - linked security ( ILS ) sector has led to rising fears that if a major catastrophe occurs , investors will face unexpected losses which would lead to bankruptcy and a rush of funds out of the market . The speed at which institutional investors have put their capital into this market has raised concerns that investors are allowing the higher returns and diversification benefits on offer to obscure a more objective analysis and understanding of these assets , so they will be unprepared if a major disaster takes place .
Timetric's Jay Patel warns that a rapid growth in the insurance-linked security (ILS) sector has led to rising fears that if a major catastrophe occurs, investors will face unexpected losses which would lead to panic and a rush of funds out of the market. The speed at which institutional investors have put their capital into this market has raised concerns that investors are allowing the higher returns and diversification benefits on offer to obscure a more objective analysis and understanding of these assets, so they will be unprepared if a major catastrophe takes place.