A way of transferring insurance risk to the capital market by way of securitised bonds, e.g. catastrophe bonds and life bonds. They are attractive to investors as they have a high yield and lack correlation with other assets. Losses caused will be unconnected with economic downturns. There are three types of trigger for ILSs: indemnity (actual losses of bond-issuing insurer); index (benchmarking of loss estimates); or parametric.