Focus: Alternative capital brings with it issues insurers must manage

Third-party capital has been a feature of the market for several years. While equity and debt have always been common features of the capitalisation of the insurance market, the direct use of money from the capital markets only became a feature when the insurance industry and its regulators realised the scope for aggregated losses from individual events potentially surpassed the ability of the industry to cover those events and, accordingly, placed into question the ability of the insurance market to provide the insurance protection that is its raison d’être.