The impact of the Insurance Linked Securities (ILS) market and other convergence vehicles has had a significant influence on pricing now it may offer more cost effective coverage, according to reinsurance specialists.Recent reports have seen such entities as Guy Carpenter & Company LLC, Aon Benfield and Willis Re weigh in on the subject, with Guy Carpenter stating approximately $10 billion of new capital has entered the market in the form of catastrophe bonds, sidecars and collateralised structures over the last 18 months as a growing number of investors have been attracted reinsurance by the higher yields and low correlations.The surge in alternative, or convergence, capital has “changed the nature of the sector’s capital structure, as investors grow increasingly comfortable with supplying capacity through a convergence of both traditional and alternative vehicles,” the reinsurance intermediary stated in their June 2013 renewal briefing.Competitive pricing may be part of the reason for that increased comfort level.David Flandro, global head of business intelligence at Guy Carpenter, said: “The reinsurance sector has exited the fairly consistent post-Katrina Florida property catastrophe pricing range.“This has been driven by a very real change to the sector’s capital structure and this change is continuing unabated. New sources of capacity are emerging with implications for pricing, availability and structure.”And for the first time, there were several instances of ILS pricing delivering a more cost effective risk transfer solution than traditional vehicles, Guy Carpenter stated.The reinsurance specialist added: “While traditional reinsurance has certain capital constraints for peak risk zones, such as Florida, the lower cost of capital assumptions afforded to third-party funds gives them the potential opportunity to charge less for peak US wind risks than traditional reinsurers.”