A $20 billion cash injection has been pumped into non-traditional reinsurance over the last two years, according to industry experts Guy Carpenter.

The new capital has entered the market through investments in insurance-linked securities (ILS), funds and sidecars, as well as through hedge fund-related reinsurance companies and collateralised reinsurance vehicles.

And the transfer of risk direct from the risk-bearer to the capital markets — cutting out the insurance middleman — has become increasingly popular.

David Priebe, vice-chairman of Guy Carpenter, said: “Guy Carpenter and GC Securities have pioneered these innovative forms of risk transfer and we are committed to finding the optimal form of risk mitigation for our clients from the vast array of potential solutions across all markets.”

The news came in a major Guy Carpenter report which focused on the growth in ILS over the last year and recent developments in catastrophe bond structure and risk transfer.

Mr Priebe pointed to the MetroCat Re Ltd bond, whose insured is the captive insurer of the New York Metropolitan Transportation Authority and which transferred the risk associated with storm surge and flooding directly to capital markets investors without a traditional insurance company acting as an intermediary.

The report said: “As the quality of catastrophe modelling continues to increase and as capital markets investors become more comfortable with innovative terms and conditions, more types of risk may directly access the capital markets in ILS form.”

And it added: “The amount of limit placed utilising ILS and collateralised products continues to grow and some markets are broadening the line of business and product focus.

“Utilisation of capital markets capacity in the first six months of 2014 saw a continuation of the growth trends seen in 2013.”

And the report said: “As collateralised markets continue to increase in importance as an alternative to both traditional reinsurance and ILS, Guy Carpenter has taken an active role in analysing counterparty risk and developing specific structures and strategies to manage this risk.

“The report provides an overview of the manner in which Guy Carpenter assists its clients in managing counterparty risk and limiting credit exposure.”

The report also explores how the use of capital markets-based capacity can provide cost-saving for public bodies by helping them to build a surplus, reduce public debt and limit the risk that natural disasters can pose to a state’s balance sheet.