Augment Risk aims to underpin ILS securitization with models and AI

Augment Risk, a growing risk capital and reinsurance solutions broker, said it aims to harness artificial intelligence technology alongside sophisticated models to underpin the insurance-linked securitization process to differentiate its new ILS broking and advisory offering.

As we reported this week, Augment Risk launched a dedicated insurance-linked securities (ILS) offering to break into the market for matching insurance risk with institutional capital, hiring Thad Hall to lead it as Partner, Head of ILS Solutions at the firm.

Now, the company has released a little more detail and highlighted a technological approach to making the ILS securitization process more effective for its clients, to make the provision of reinsurance capacity from the capital market more efficient.

While ILS is already a large and still growing percentage of global reinsurance capital, at close to 20%, Augment Risk believes there is an opportunity to expand on that.

“ILS products have gained traction in recent years, yet alternative institutional investor capital currently represents less than 20% of the $600 billion of reinsurance capital,” the broker explained. “Crucially, there remains a coverage gap between insured and economic loss that could be closed with the help of capital markets.”

Thad Hall, Partner and Head of ILS Solutions at Augment Risk further explained, “Connecting risk to capital is not a one-size-fits-all proposition; risk originators and investors have diverse needs that can be addressed through customized solutions.

“With our bespoke approach, ILS provides true capital diversification for risk origination clients, supporting growth and improving value, and for investors, it offers uncorrelated security with mid-teens return.”

In explaining the approach, Augment Risk highlighted the plans for use of AI and technology within its ILS offering.

“Augment Risk underpins the securitization process using sophisticated statistical models aided by AI to analyze vast datasets with tools that capture key trends and market information quickly and efficiently, enabling the ILS Solutions team to spend more time helping clients make strategic risk management decisions,” the company said.

“In an era where technological innovation and insurance are evolving rapidly, we are delighted to expand Augment Risk’s offering with an ILS division,” Andrew Matson, CEO, Augment Risk added.

“With Thad’s industry background and an exceptional insight into ILS structuring, we are well positioned to deliver alternative and bespoke capital solutions to our clients, alongside the traditional reinsurance capacity.”