Financial technology

Speaking at the Convergence event in Bermuda today, Adrian Jones, a former partner at HSCM Ventures, the venture capital business affiliated with Hudson Structured Capital Management, highlighted the artificial intelligence opportunity for the insurance-linked securities (ILS) industry, but also cautioned the ILS sector to take care with data.

Munich Re Ventures, the insurtech and related risk technology investment arm of the global reinsurance company, has closed a $500 million capital raise for a new Munich Re Fund II and now looks to broaden its approach to investing in the most innovative start-ups transforming the future of risk.

The insurance-linked securities (ILS) market is currently experiencing somewhat of a flight to simplicity, and with technology led risk transfer solutions set to drive greater standardisation, it’s expected that the capital markets will be able to participate more readily as a result.

The challenges faced by traditional reinsurance firms are likely to “extend beyond a normal soft market cycle” as factors such as the growth of alternative capital, changes to the value-chain and higher regulatory costs all weigh on reinsurers, according to Fitch Ratings.

The insurance and reinsurance industry should expect further disruption as financial sectors with inefficient cost structures and high capital usage face threats from new entrants, business models, technology and alternative sources of risk capital, according to Oliver Wyman.

As the insurance-linked securities (ILS) sector continues to mature, market participants have an opportunity to collaborate with technology firms to develop tools that can move the industry forward, according to insurance and reinsurance software provider Xuber.

Insurance-linked securities (ILS) industry veterans Stefano Sola and Richard Pennay have launched a new technology focused ILS firm, Rewire Holdings LLC, seeking to increase efficiency in the syndication of catastrophe risk to reinsurance and capital markets.