Reinsurance executives discussed how artificial intelligence is supercharging cyber hacks into catastrophic physical and supply-chain crises.

The technology is developing so quickly that AI agents are now building AI solutions and collapsing tech implementation timelines from years to months, they were told during meetings at Hamilton Princess & Beach Club last week.

Delegates to ReWiRe, the first meeting of Women in Reinsurance also heard how rising interest rates risk triggering disintermediation in the $300 billion annuity market — a market principally reinsured into Bermuda.

Disintermediation is an insurer covering higher than expected claim losses, and having to sell investment assets at a loss because of elevated interest rates.

Sylvia Oliveira, the chief executive of Wilton Re Bermuda, said there were also mortality risks impacting different products, such as GLP-1s and questions about its affect on life extension, and questions on if the opioid epidemic created a widespread shortening of lives.

She said: “In the 1918 Spanish flu the strong intended to survive. Research shows mortality was improved after that pandemic, right?

“The same thing could be true for Covid, but there’s also long Covid. So that could have a detrimental impact to long-term mortality.”

She also noted how geopolitical issues and the AI bubble could have an impact on credit risk because of insurance portfolios heavily invested in the development of data centres.

“If they don't work out that could be problematic,” she concluded.

The conference was also told to expect shifts in population, especially because most of the world is falling behind the 2.2 live births per woman needed to maintain population numbers.

Lara Mowery, chief commercial officer at Gallagher Re, commented: “We are trending away from being able to replace our own population. So our density is going to decline.

“Africa's on the rise. The average age in Africa is in the teens. One in four to five people on the planet by 2030 will be living in Africa.”

She said average ages in Japan were in the fifties, and in the US and most of Europe in the forties.

“What does that actually mean ten years from now?” Ms Mowery asked. “And how do we need to be thinking about the ways the risk landscape changes? And that's just one little example of the things that shape what we [re/insurance industry] do and need to be able to respond to.”

Moderator Adria Da Breo Richards, senior vice-president, global head of property catastrophe — international and assumed retrocessional — property CAT with RenaissanceRe questioned how the industry could ensure a more interconnected world.

Because of increasingly interconnected risks, a single event can generate losses across multiple and distinct lines of business. She sought answers to evolving client needs, and how brokers and reinsurers identify, structure and manage risks across traditional boundaries.

Ms Mowery said Gallagher Re pulled together a digital risk team by combining the cyber team with data centre and AI liability teams. Risks that have to be considered include business interruption.

“How do you understand and manage accumulation risk across a data centre landscape?” she said. “The hyperscalers get all the press. That’s all everybody's talking about.

“There are hundreds of data centres worldwide that have existed for a long time and are sitting on people's balance sheets. That risk is out there. Do we really have a sense for the types of losses that might be coming through that data centre sector and how interrelated multiple classes of business are impacted?”

She said the industry was in the business of risk solutions, drawing a reference to geopolitical events such as the traffic shutdown at the Strait of Hormuz, with global impact and the usual coverage cancellation provisions.

But the repricing happened in days with fresh coverage available.

“People may not like the price,” she said. “But it was an incredibly, highly risky situation that warranted a price adjustment.”

Kathleen Reardon, the chief executive of Hiscox Re, said that risks did not always fit so neatly in a box as the world had become far more interconnected. As an example, hundreds of supermarket refrigerators were hacked in France, causing business and supply chain interruption, food spoilage, equipment damage and some fires.

She said: “As underwriters we do step back and think about how lines of business can trickle down and trigger the larger events. But in this interconnected world, we need to consider those knock-on effects in a more focused way. And I think with AI, things are going further, they're going faster, and that fridge example on a global scale would be a threatening event.”

Similarly, several US states had water systems hacked and increasingly AI is being identified as the culprit.

Ms Mowery said: “You might think the big hurricane or the big earthquake is my worst case scenario. Is it still?”

Ms Oliveira noted external concerns about any chance of a failure with the estimated $2 trillion in assets under management in Bermuda’s life sector and the threat of systemic risk spread throughout the world as a result.

The BMA last year required life companies to conduct a stress test under a global financial crisis scenario. The vast majority of companies were holding enough excess capital to withstand those conditions.

“Those types of exercises are important I think to make sure we have a handle on the potential impact,” she said.