ILS market poised for further growth as barriers to modern tech decline: Moody’s Brookes

With barriers to adoption of modern analytical methodologies and technological innovations lower than ever, Ben Brookes, Managing Director – Advisory Services, Moody’s Insurance Solutions, has observed that the insurance-linked securities (ILS) industry is at a “pivotal moment”, poised to become stronger, more adaptable, and primed for growth.

In a recent report on the market outlook, Brookes emphasised the substantial growth potential of the ILS industry, driven by increasing global demand for financial protection.

However, the report also notes that adopting new technologies is essential for the market to achieve this growth.

“By using the latest data analysis and technology, ILS fund managers can make better decisions about risk and price more accurately, leading to smarter investments and better use of funds,” Brookes explained.

He continued, “Contemporary analytical solutions allow the ILS industry to benefit from more robust risk assessment models that accurately anticipate and quantify emerging risks, and also offer a more reliable foundation for decision-making and address the limitations of older systems.

“Adopting modern analytics can also enhance the market’s overall transparency, making it more attractive to a broader range of investors and strengthening its position within the global financial ecosystem.”

By prioritising the integration of cutting-edge data and analytical tools like those used by reinsurers, Brookes suggested that the ILS market can “redefine its approach” to risk management, paving the way for a more informed, resilient, and dynamic future.

What’s more, as per the report, technology is becoming more accessible and user-friendly, enabling a smoother transition for the ILS market to harness the power of modular modelling solutions, AI-driven risk analytics, and cloud-native catastrophe models.

Brookes added, “The ILS industry finds itself at a pivotal moment, where the necessity to move forward, and the convergence of technology has created real opportunities for advancement. Luckily, the barriers to embracing modern analytical methodologies and technological innovations are lower than ever before.

“Obstacles posed by the cost of technology adoption, the complexity of integrating new systems, and the inertia of moving away from familiar frameworks have largely been dismantled.”

He concluded, “Moving towards using more advanced technology is about making sure the ILS market is stronger, more flexible, and ready to grow. These changes are helping to improve how we manage risk, making it faster, more accurate, and more reliable.”