09 Oct 2023

SBAI Publishes Updates to Insurance Open Protocol

The Standards Board for Alternative Investments (SBAI) has published updates to the Insurance Open Protocol (“IOP”).

The IOP forms part of the Open Protocol (“OP”) risk aggregation templates that were first launched in 2011, which standardise the collection and representation of risk information of investment funds for investors, and which is currently used by funds representing over $1.85tn in assets under management. [1]

IOP provides a risk reporting template for funds that have a significant exposure to property catastrophe insurance risk. It has been developed to cater for the unique characteristics of property catastrophe exposure, including risk types, sources of leverage, stress tests results and side pocketing.

Michael Hamer, Partner and Senior Investment Analyst at Albourne Partners said: “IOP’s risk reporting has been expanded to include information at the manager, fund, and share class level, and at intervals that are better aligned with the insurance cycle. The increased reporting of stress test results and the flexibility to add new stress events to the template in the future should materially improve the ability to see how funds interact from an overall Insurance Linked Securities portfolio risk perspective.”

Rishab Sethi, Director of External Investments at New Zealand Superannuation Fund stated: "For institutional investors it is vital to have a clear perspective on portfolio risk in order to detect concentrations. OP (and IOP) provides a simple format to monitor the aggregated risks in our portfolio."

Mike France, Managing Partner and CFO of Elementum Advisors noted: “We are proud to support the (Insurance) Open Protocol initiative as part of a broad, industry-wide effort to increase transparency and reduce ambiguities around risk and exposure reporting. We believe that an industry-wide standardised approach to risk reporting can benefit investors and managers alike."

Dale West, SBAI Trustee and Senior Managing Director of Public Markets at Teacher Retirement System of Texas stated: “Insurance-Linked Strategy (ILS) funds have long been hard to compare with one another due to a lack of uniform reporting. The new Insurance Open Protocol standards provide a straightforward format to monitor the aggregated risks in our portfolio, to the benefit of our pension plan members. We encourage all ILS funds to help further institutionalise the space by participating in these new reporting standards.”

For practical reasons, the IOP Templates will be integrated into the broader OP Reporting framework, harmonising the data provided at the manager level, making it easier for investment managers who report data for both ILS funds as well as other investment funds.

The updates to the IOP template have been made in consultation with the SBAI’s ILS Working Group, which brings together leading ILS fund managers and institutional investors. The IOP is one of the many resources the SBAI ILS Working Group has developed, including guidance on valuation and side pocketing practices in insurance-linked funds. Current areas of focus of the ILS Working Group include collateral management, performance reporting, and benchmarking.

The SBAI is an active alliance of over 150 alternative asset managers and over 100 institutional investors dedicated to advancing responsible practice, partnership and knowledge. It advocates for an effective alternative investment ecosystem through robust standards and the exchange of ideas. For more information on the SBAI or to join the SBAI community, please contact [email protected] or visit the website www.sbai.org.


[1] Assets under management of funds reporting to Albourne as of August 2023