SECURITIZATION AS AN ALTERNATIVE WAY OF MANAGING THE RISK OF CATASTROPHIC EVENTS

Abstract

Catastrophic events caused by natural
disasters and human activities pose a unique
challenge for insurers, because they make it
difficult to estimate expected claims and can cause
disruption to the insurance market and impose
significant costs on government, businesses and
individuals. The lack of available coverage of
these risks in the market, due to the insolvency or
unwillingness of insurers to ensure catastrophic
events, can significantly impede the economic
recovery and development of the country. For this
reason insurers have sought alternative ways of
covering these extreme losses, and one of them, a
transfer of the risk of insurance to the capital
markets represents the main subject of this
research. The aim of this maneuver is to present
the advantages and disadvantages of the
instruments through which the transfer of
insurance risk to financial markets is carried out,
as well as to indicate the legal and other
assumptions necessary for the functioning and
development of this market.