What is a Peak Peril?
The catastrophe risks that generate the largest potential losses and drive ILS market capacity needs. US Hurricane is the dominant peak peril.
Peak Peril
The catastrophe risks that generate the largest potential losses and drive ILS market capacity needs. US Hurricane is the dominant peak peril.
How it works in practice
US hurricane risk is the largest peak peril in the global cat bond market. Because a single major hurricane can generate tens of billions of dollars in insured losses, bonds covering this peril carry the highest expected losses and the widest spreads. Peak perils drive portfolio risk for most ILS funds and require the most careful modelling and exposure management.
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