In the past few years, the demand for Residual Value Insurance has been exponential. The reduction in traditional funding has led to a huge demand for alternative solutions to debt financing for big ticket assets and has fuelled the use of operating leases, finance leases and the need for investment from private equity partners. These structures often require a level of RVI from lessors unwilling or unable to take asset risk and from investors wishing to limit their downside.
Contrary to the demand the underwriting market for RVI is limited, with only a handful of RV providers prepared to offer terms on a highly selective basis. In the last few years a number of new RVI insurers have entered the market and there has also been the emergence of a reinsurance market.
In terms of underwriting, each RV provider has preferences for asset types and levels of risk. For example, aircraft types, real estate and as values of commercial vessels have declined, a market has developed for most types of shipping. Part of our role is to match the risk appetite of the RV underwriters to the requirements of our clients.