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Oliver Wyman urges standard parametric triggers for ILS in digital infra
Oliver Wyman cites JP Morgan estimates that US$5 trillion of global capital will be needed from 2025 to 2030 for data center and AI infrastructure, with larger forecasts reaching US$7 trillion.
Insurance-linked securities could expand into digital infrastructure as AI and data center buildouts accelerate, but doing so requires structural changes to how risks are underwritten, according to Michael Moloney of Oliver Wyman.
Moloney, speaking in the context of Guy Carpenter’s latest report, said progress such as standardized parametric triggers and portfolio aggregation mechanisms would be key to applying ILS to digital infrastructure risk, where exposures can include power supply interruption, power purchase agreement counterparty default, construction delay cascades, and grid interconnection failure.
He argued that ILS modeling is a major barrier because digital infrastructure risk lacks an equivalent actuarial foundation to physical catastrophe events, and because the relationship between power supply disruption and data center revenue loss can evolve as grid topology, contracts, and operational dependencies change.
Moloney also pointed to capital needs for the sector, citing JP Morgan estimates of US$5 trillion required globally between 2025 and 2030 for data center and AI infrastructure growth, with broader forecasts extending to US$7 trillion over the same period, and noting that large hyperscalers are projected to deploy more than US$800 billion in 2027.