Insurance-linked securities (ILS) are being highlighted as a key tool to address Europe’s growing climate and agricultural risks, according to Philipp Kusche, Chairman of HCMA Europe and global co-head of ILS at Howden Capital Markets & Advisory. Kusche stated: “Insurance-linked securities (ILS) can play a transitional role: market pricing can illuminate hotspots of excessive exposure and channel capital into adaptation strategies.”
The catastrophe bond market has seen significant evolution in recent years. According to the EU’s Insurance and Risk Management Tools for Agriculture report—published by the European Investment Bank, European Commission, and Howden—Europe’s agricultural sector currently faces €60 billion in annual catastrophe risk, with this figure expected to rise to €90 billion by 2050.
Insurers in Germany and across the DACH region are increasingly adopting cat bonds as part of their strategy to diversify capital sources and manage exposure. The global catastrophe bond market is now valued at more than €50 billion.
Kusche explained that ILS products have the potential to fill the gap between traditional insurance solutions and government intervention. He said these instruments serve both as a financial buffer against large-scale events and as catalysts for broader systemic adaptation.