Not that many years ago, the alternative risk transfer (ART) market had only a minor role in the overall US commercial insurance community. However, several cycles of rapidly increasing premiums have led many of the favorable commercial accounts to seek a viable risk financing option. One factor that typically affects the ART market movement is property and casualty insurance pricing. No review of 2007 or preview of 2008, for that matter, would be complete without noting the effect of the subprime mortgage crisis in the financial markets. Exposure to a number of costly disasters over the past 20 years has shown the insurance industry that despite its best efforts, it just does not have sufficient capital to withstand large-scale, catastrophic type events that are frequently associated with weather-related losses. Without question, today's reinsurance market is clear evidence that the long anticipated convergence of the capital and insurance markets is working well.
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