According to executives at the World Bank, artificial intelligence (AI) based improvements to catastrophe risk modelling could in future allow more transactions to be brought to the catastrophe bond market, with less lead time and potentially wider investor acceptance.
In a joint report on the matter, the World Bank’s Michael Bennett, Head of Market Solutions and Structured Finance, and Akinchan (Aki) Jain, Head of Asset & Liability Operations, observed that the lack of robust modelling of risks in many developing countries is one of the factors that limit its ability to offer cat bond natural disaster coverage to more of its member governments.
However, as per the report, AI has the potential to alleviate this limitation by “shortening the time required to develop new models and improving modelling reliability.”
FULL ORIGINAL PUBLICATION HERE