As the re/insurance industry embraces AI and digital infrastructure, the growth potential of insurance-linked securities (ILS) hinges on critical structural improvements, according to Michael Moloney of Oliver Wyman. He emphasizes the necessity for standardized parametric triggers and portfolio aggregation to enhance ILS integration into the digital domain. With JP Morgan predicting a global need of $7 trillion for data center and AI infrastructure by 2030, new risks like power disruptions pose challenges due to lacking actuarial data. To capitalize on ILS opportunities, Moloney highlights three essential developments: standardized insurance products, diversification mechanisms, and better alignment of power agreements with investor insights. This evolution will shape the future of capital convergence in this emerging asset class.
