Catastrophe insurers and reinsurers will need to develop more secure channels for accessing capital that reflect the potential for future capital market disruptions and implement new risk management measures reflecting the lessons of the current economic crisis and the evolving regulatory response, according to a report by I.I.I. president Dr. Robert Hartwig. The report notes that while financial crises have always posed severe challenges, the capital intensive nature of catastrophe risk funding amplifies those challenges. The global economic crisis that began in the U.S. subprime mortgage sector in mid-2007 spread with remarkable speed and ferocity to challenge the operations of every segment of the global financial services industry, including insurance. Ã‚ Although the basic function of nonlife insuranceÃ¢â‚¬”the transfer of risk from client to insurer (and insurer to reinsurer)Ã¢â‚¬”continued uninterrupted, the capital intensive nature of catastrophe risk funding has been disrupted more than is generally appreciated. Hartwig notes that primary and reinsurer capacity in the United States and Europe fell by 15 to 17 percent within the first year of the crisis and most measures of capital adequacy continued to deteriorate through early 2009. Ã‚ Though not presently viewed as solvency threatening, the industryÃ¢â‚¬â„¢s ability to quickly attract and retain capital at reasonable cost following a major capital event has clearly been impacted. The report was presented at a conference sponsored by Aon Benfield Australia Limited on the theme of probable maximum loss, frequency vs. severity.