artificial intelligence

The catastrophe bond and insurance-linked securities sector can be a significant beneficiary of the revolution in artificial intelligence (AI), with applications such as process improvement, enhanced underwriting and analytics, as well as powering the ILS industry to do more, speakers discussed at the SIFMA ILS conference in Miami last week.

As the data centre build-out continues to expand as an emerging field across the industry, it appears very likely that insurers, reinsurers and various organisations may turn towards catastrophe bonds to source risk capital for these facilities, according to John Seo of Fermat Capital Management LLC.

During the SIFMA ILS conference in Miami yesterday a panel discussed the topic of data centre risk and some of the considerations that need to be kept in mind as the insurance-linked securities (ILS) market looks at these potentially meaningful opportunities.

As per a new report from Ernst & Young Ltd. (EY), the reinsurance sector is entering a era of “latent market demand” where private equity and alternative capital providers are set to expand their presence by exploring AI-linked securities, cyber catastrophe bonds, and other innovative investment vehicles.

As the insurance and reinsurance market responds to the growing risk capacity needs of the digital infrastructure and data centre build-out, collateralized insurance-linked securities and parametric risk transfer are playing a role in covering exposures such as correlated power grid events, according to Guy Carpenter’s Jeremy Goodman.

Swiss Re’s CEO Andreas Berger said the reinsurance company is focused on amplifying the core of its business to deepen its relevance, citing leverage from alternative capital, a need to reimagine the value-chain, the role of artificial intelligence and the importance of disciplined cycle management at this time.

With growing capacity demands within AI and other cloud computing services leading towards a surge in data centers, this rapid expansion also presents a clear role for insurance-linked securities (ILS) and the capital markets, according to broker Aon.

Descartes Underwriting, a specialist underwriter of parametric risk transfer opportunities, has unveiled a new parametric product suite for data centres, providing flexible capacity of up to $140 million per policy against natural perils that threaten timely completion of construction, commissioning, and ongoing service delivery.

With collateralized reinsurance emerging as a key tool for insurers seeking greater flexibility and access to alternative forms of capital, the industry’s focus should be on expanding the overall market for protection, drawing on all types of capital to meet rising demand, Chris McKeown of Vantage Risk told us in an interview.

Descartes Underwriting, the parametric risk transfer specialist, has adopted mea Platform’s artificial intelligence (AI) products to enhance automation and data orchestration across its underwriting processes.