Catastrophe modeling could aid casualty reinsurance buyers
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NEW YORK — Catastrophe modeling in the casualty reinsurance buying space faces challenges to adoption but could benefit the process, according to a panel of Industry executives speaking at the AIR Worldwide Cyber Casualty conference in New York on Tuesday.
There remains some fundamental doubt as to the potential of casualty catastrophe modeling, according to Adam Troyer, managing director with Aon Reinsurance Solutions.
“One of the things we find is there’s skepticism whether you can model this type of risk,” he said, which prevents time and resources from being allocated to developing the field.
Data is one of the specific challenges faced in developing casualty catastrophe models, said Robin Wilkinson, vice president and managing director of casualty analytics for AIR Worldwide.
“Just getting the data” is one of the challenges, she said. “Historically, casualty hasn’t maintained data in a structured way.”
Some progress is being made, however, according to Greg McNulty, vice president of casualty catastrophe for reinsurer Scor SE.
“We’ve actually had some success getting information from cedents,” he said. “Data is a challenge, but it’s able to be overcome.”
Catastrophe modeling could benefit the reinsurance buying process, Mr. Troyer said, describing it as a “great opportunity to bring more quantitative rigor around the casualty insurance buying process.”
He added that modeling could also help unlock capital markets for casualty insurance.
“On the property catastrophe side, the models allowed the catastrophe bond and the alternative capital markets to flourish,” he said, and could similarly open up opportunities to bring new capital providers into the casualty space.
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