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.
Bobby Bray, Senior Vice President, Insurance-Linked Securities Origination and Structuring at Guy Carpenter’s specialist capital markets unit GC Securities, said he sees meaningful potential for the industry to benefit from AI technologies.
Bray explained, “The ILS sector is kind of behind the eight ball and slow to adopt the technology. But I think fundamentally, we’re just in the very early innings of adoption.
“In fact, given the vast amounts of data involved and the reliance on key models, we have the opportunity to become the biggest beneficiaries of the AI revolution.
“We’ve already seen it be impactful through modelling, weather forecasting, underwriting, and so maybe as adoption grows and the technology continues to improve, I think we do have the opportunity to be one of the biggest beneficiaries in this AI revolution.”
Richard Gray, Head of Third-Party Capital at Beazley, highlighted some of the ways the company is looking to introduce AI to enhance its business and processes.
Gray said, “Ultimately, we know that although we can use it for boring data-entry processes which are, not only as a result, less painful for the human beings, and are also obviously much quicker because of the speed of the processing which is now available.”
But he added that, “We still need human beings to check that work.”
“We’re not going to suddenly use AI to draft our legal documentation for ILS, but inevitably, across the entire business, not just in ILS, it has this opportunity to provide a valuable work tool. But it’s not a silver bullet, certainly not yet and certainly not given the constraints of the process,” Gray continued.
Going on to say, “There’s just a lot going on. AI impacts us both in terms of processes, in terms of the underlying risk from cyber and obviously, in terms of what we are looking at from the property perspective.
“So it’s a big topic for us, it’s something we’re spending a lot of time thinking about.”
Bray highlighted how AI technology can assist in the catastrophe bond market, particularly in speeding processes and managing documentation.
“With the cat bond structure. I think the process can improve, and I think often-times that can be a hurdle for potential sponsors. Whether it’s the volume of documentation or just the longer timelines than they’re used to in the traditional side,” Bray said.
Continuing, “There’s a lot of room to improve. A lot of room to clean up those processes, where something as simple as adding or deleting a class out of an offering circular could take an associate a few nights just to wrap that up, where AI could do it with the click of a button.
“That’s powerful, and could really help folks get get over that hurdle of, I don’t know if I want to read a 300 page offering memo for my risk transfer, I just want to send my submission out.
“So I think it’s got those types of implications, at least in the start. Then as AI grows and as the adoption grows with it, you know, the world is our oyster, I think we can do a lot with it.”
The panellists also discussed the potential for AI to improve models and forecasting for weather perils, as well as the developing efforts to utilise ILS capital to support the AI data centre build-out.
Read other coverage from the 2026 SIFMA ILS conference:
– Investors show huge interest in data centre risk. Diversification story of ILS a consideration: SIFMA.
– Casualty sidecar / ILS market to expand. Alignment, maturity driving investor interest: SIFMA.
