Securitization of insurance risks.

Summary Insurance is a mechanism for reducing pure risk (risk of loss), which takes the form of losses affecting the assets of economic agents. Insurers, specialized financial intermediaries, mutualize these risks within a portfolio, the technical management of which is based on the insurer's own funds, the security load of premiums and reinsurance. These methods are not always sufficient to effectively offset the risks in the portfolio. This is why certain insurance risks are transferred to the financial markets, via insurance futures and options, contingent bonds and insurance swaps. This securitization process brings together investors willing to participate in an insurance risk and insurers seeking to protect their results. Designed around the notion of loss experience, these instruments allow insurers to hedge their operating income, resolve the agency conflict between the insurer, its shareholders and its policyholders, increase their solvency and make reinsurance operations reversible. In an equilibrium model, the optimal demand for insurance futures and the insurance futures price are calculated for both mass and rare risks. The advantage of tradable insurance instruments is the reversibility of positions, while allowing coverage profiles close to those offered by reinsurance. Their development will therefore take place in the branches that combine a significant rate of reinsurance cessions and sufficient interest for investors. The latter, wishing to diversify their portfolios (to increase the expectation of profitability with fixed volatility) have an advantage in buying insurance instruments, which form an asset class with a zero sensitivity coefficient. The meeting of the interests of insurers and investors, combined with a growing stream of academic research, guarantees the growth of the securitization process of insurance risks.