As the reinsurance market continues to expand and adapt to the current wave of technological change, increasing capital diversity is enabling the development of new products.At the same time, data-driven enhancements in modeling tools and risk-analysis processes are encouraging a broader range of investors to back reinsurance, according to Willis Re.In a recent article, Willis Re said: “Reinsurance is changing its spots.Whether aggressively or reluctantly, carriers, brokers and capital providers have begun to embrace the current, unprecedented wave of technological change.

The ongoing upgrade to Reinsurance Market 2.0 is reflected in reinsurance products, pricing, risk management and even regulation.” As per the recently launched specialist reinsurance broker, through “Reinsurance Market 2.0”, (which is what they are calling this next phase of growth), more risk data is captured at every stage, with improved analytics delivering deeper insights.“They engender a higher level of confidence sufficient to embolden a broader spectrum of capital providers to invest in reinsurance risk.In turn, capital diversity allows the creation of more dynamic products,” the firm said.

The firm noted that these tech-driven improvements also give clients a new level of flexibility in their interactions with markets.“They allow individual cedants’ distinctive capital profiles, risk appetites, return requirements, and corporate objectives to be reflected and respected at every juncture,” Willis Re added.The report also outlined how modelling and analytics have advanced far beyond traditional peak-peril assessments, with cloud-native, AI-enhanced, and multi-model approaches enabling real-time scenario analysis, climate risk insights, and automated portfolio stress-testing.

“New approaches bring together established vendor views, AI-driven hazard models and niche vendors, including through the open-source Oasis platform.The result is dramatic improvement in model outputs which has fostered the proliferation of capital transformation tools,” Willis Re added.The firm continued: “Reinsurance Market 2.0 is backed by a diversity of capital which spreads global risk more widely than ever before.

The data-driven improvement of modeling tools and risk analysis processes has encouraged a much wider range of investors to back reinsurance, especially through unambiguous risk transfer mechanisms such as parametric-triggered catastrophe bonds which eliminate capital trapping.” This clearly shows how the reinsurance sector is evolving.Improved data and risk-modeling tools have attracted a wider range of investors to provide capital for insurance risks, especially through clearer, parametric risk-transfer mechanisms.Willis Re also pointed out that pension, hedge and bond funds, as well as family offices, are showing a growing appetite for reinsurance risk.

Structures such as sidecars and transformer vehicles like Lloyd’s London Bridge 2 PCC insurance-linked securities (ILS) structure are also removing the friction from access, the firm added.The firm also noted that this is complemented by technology-driven reinsurance MGAs that focus on niche risk types, providing them with attractive bundles of accurately priced risk..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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