The Standards Board for Alternative Investments (SBAI) has published an Introduction to Insurance Investing, a concise, practitioner-focused guide to Insurance-Linked Strategies (ILS), designed to demystify the asset class while promoting transparency and informed decision-making across the institutional investment landscape.
According to the announcement, the guide was developed by the SBAI’s ILS Working Group, comprised of leading ILS managers and institutional investors from its global network of Signatories and Investor Chapter members, which collectively represent more than USD $11 trillion in assets under management.
As per SBAI, the guide provides investment committees, portfolio managers, and risk teams with insights into how ILS can enhance diversification.
The publication also explores the variety of underlying risks and instruments within the ILS space, such as catastrophe bonds and collateralised reinsurance, while also highlighting the operational and valuation considerations that sets ILS apart in today’s evolving landscape.
Jane Buchan, Chair of the Board at the SBAI, commented: “At a time when institutional investors are seeking both diversification and resilience, insurance-linked strategies have a growing role to play. This guide reflects the SBAI’s commitment to equipping allocators, fiduciaries, and decision-makers with the tools they need to navigate this space confidently and responsibly. Promoting understanding and transparency is core to our mission, and we believe this resource will help advance both.”
Furthermore, SBAI’s new guide addresses common barriers to adoption, which includes terminology, liquidity mechanics (including collateral traps and side pockets), event-driven valuation, and issues related to manager selection.
In order to support effective implementation, the guide also offers clear frameworks for governance and oversight, along with practical checklists and plain-language explanations suitable for investment committee packs and onboarding materials.
The topics that are covered in SBAI’s new guide includes:
- Why ILS matters: low correlation to traditional markets and structural risk premiums in “peak perils”
- Access routes: cat bonds, ILWs, sidecars, and collateralised reinsurance – direct vs. fund structures
- Liquidity & valuation: secondary-market realities, post-event collateral / side pockets, and mark-to-model NAVs
- Manager due diligence: sourcing, underwriting, modelling, and climate / secondary-peril views, and conflicts
- Operating terms: triggers, legal / tax / regulation, fee alignment, and reporting templates
Chantal Berendsen, Partner and Senior Hedge Fund IDD Analyst at Albourne, said: “Education is the first step toward prudent allocation. This guide performs an important role in equipping fiduciaries with the foundational knowledge needed to understand and evaluate insurance-linked strategies.”
For those unaware, Albourne is a co-chair of the Open Protocol Working Group alongside the SBAI. The Open Protocol template standardises the collection and reporting of risk data, including for ILS funds.
Rishab Sethi, Director of External Investments, NZ Super Fund, added: “Incorporating ILS into a portfolio requires not just an understanding of the return potential, but also the ability to clearly articulate the strategy’s role within a broader asset allocation framework. This guide helps support that process by translating technical concepts into language that resonates with boards, investment committees, and other key stakeholders.”
Richard Lowther, Co-Founder and Managing Partner, Integral ILS, commented: “The ILS market has grown substantially, but accessible education has not always kept pace. This introductory guide is a welcome initiative that helps demystify the space and promote transparency and informed decision-making across the institutional landscape.”
The new guide can be accessed from the SBAI website here.
