ILS market structurally healthy, but faces crucial test in cycle management: Steiger, Icosa

Following several years of strong returns and renewed inflows, the insurance-linked securities (ILS) market currently sits in a structurally healthy position, however this recent momentum must be balanced with disciplined cycle management, Florian Steiger, CEO and Founder of Icosa Investments told Artemis in an interview.

Speaking to Artemis just before the 2026 Monte Carlo Rendez-Vous de Septembre (RVS) reinsurance industry event, Steiger reflected on the current state of the ILS market, and also shared what Icosa’s views are regarding the rise of AI across the ILS space.

Steiger described the current state of the ILS market as “structurally healthy” and increasingly mature, whilst noting that the space continues to normalise following a number of exceptionally attractive years.

“The market is broader than in previous cycles, with stronger infrastructure, modelling and risk management capabilities, and a better foundation from which to navigate changing conditions,” Steiger explained.

“Normalisation does mean a more selective opportunity set. Over the longer term, we continue to view ILS as an attractive asset class; in our view, the key question is increasingly not whether it merits attention, but where within the universe the risk-return characteristics best fit a given set of objectives within an overall institutional investment portfolio,” he continued.

The CEO emphasised that cycle management is one of the most significant challenges currently facing the ILS market at this time, particularly as the space continues to move into a more competitive phase.

“Cycle management. After several years of strong returns and renewed inflows, the market is moving into a more competitive phase. The test is whether decisions remain driven by long-term objectives rather than by the pressure to deploy capital,” Steiger told Artemis.

“The experience of 2017–2022 remains not too far away and in that sense relevant: the market is structurally far more mature today, but historically, attractive long-term outcomes have come from adapting exposure through the cycle, not from maintaining maximum exposure at every point,” he continued.

“Discipline, as we see it, does not mean applying the same approach regardless of conditions. It means staying consistent with an investment philosophy while adapting implementation to the prevailing opportunity set.”

We then moved on to discuss artificial intelligence (AI) which continues to have an impact across the re/insurance market, and the insurance-linked securities (ILS) space, given its ability to improve catastrophe modeling, speed up deal structuring, and expand coverage into new risks.

We asked Steiger whether AI is a priority for Icosa, and whether he believes that the ILS market should be doing more to embrace new forms of technology.

“Technology is central to how we think about the ILS market. Not every decision can or should be reduced to an algorithm, but we believe an investment process is at its best when it is evidence based, systematic and reproducible,” the CEO said.

“We see the greatest potential in combining AI with automation. An obvious application is the analysis of bond documentation and legal structures, where large volumes of information can be processed consistently and differences flagged for deeper attention. AI can support analysis and challenge assumptions, but it does not remove the need for catastrophe modelling expertise, underwriting judgement, legal review or accountability for the final decision.”

Concluding: “In that sense, we do not see technology as replacing the investment manager. We see it as raising the standard of what an investment manager can be expected to analyse before making a decision.”

Read all of our interviews with ILS market and reinsurance sector professionals here.