Current Issue

Subscriber only, premium content. Tuesday, September 27

Catastrophe underwriting: Insurers' custom risk models key to improvements

Risk modeling changes and detailed data insurers need to manage catastrophe exposures necessitate they develop comprehensive models to accurately reflect their own risks.

  1. Identify & Analyze

    More innovation needed by modelers and underwriters

  2. Evaluate & Implement

    With more complex risks, using more sophisticated data

  3. Monitor & Adjust

    Insurers customizing their own models

The spate of insured losses attributed to natural catastrophes the past two years has spurred a broad reassessment of how the insurance industry uses catastrophe models. ›› More

While Hurricane Andrew is remembered for its path of destruction across South Florida 20 years ago, the storm also started a sea change in the way the insurance industry models catastrophe risks. ›› More

Karen Clark is president and CEO of Boston-based Karen Clark & Co., a firm she established in 2007 to help insurance companies enhance their exposure data processes, better understand catastrophe risk, and to more effectively utilize models and other information to manage the risk. Ms. Clark developed the first hurricane catastrophe model and in 1987 founded the first catastrophe modeling company, Applied Insurance Research, which subsequently became AIR Worldwide after its acquisition by Insurance Services Office Inc. in 2002. Ms. Clark recently discussed Hurricane Andrew's effect on catastrophe modeling with Business Insurance Senior Editor Mark A. Hofmann. ›› More

Editor's Picks: Online Solutions & Resources

Nothing new under the sun?

The pluses and minuses of catastrophe modeling have been debated since models were first used by the insurance industry more than two decades ago. An essay beginning on page 9 of the August 2006 CPCU Society's Risk Management Quarterly raises…

MONTE CARLO, Monaco—Advancing technologies, new laws and historic catastrophe losses in 2011 are altering the manner in which reinsurers interact with catastrophe modeling firms, executives said this week at the annual Rendez-vous de Septembre reinsurance gathering. ›› More

Few operational aspects of the insurance industry rely on cutting-edge technology to the extent that catastrophe modeling does. ›› More

The past 20 years of catastrophic events have taught us how important catastrophe models are, but now we rely on them too much. Jayant Khandilkar, partner at TigerRisk, says we should reduce our reliance on the probable maximum loss and develop new, more robust risk measures. ›› More

Editor's Picks: Online Solutions & Resources

Comparing catastrophe models

A white paper from the Florida Catastrophic Storm Risk Management Center at Florida State University found variations in the modeled annual average losses projected by different cat models. The paper discusses differences and why they exist.

A matter of measurement

How does the Florida Commission on Hurricane Loss Projection Methodology assess hurricane catastrophe models? Here's the panel's most recent biennial report, published last year.

For FM Global, off-the-shelf catastrophe models are no substitute for an engineer. ›› More

Editor's Picks: Online Solutions & Resources

A comparison of hurricane loss models

Hurricane models are a significant tool used in estimating loss costs in catastrophe prone areas. While the major hurricane loss cost models consider a consistent set of factors, there are variations in how the factors are treated in the models.

Do insurer responses affect models?

What are the implications of insurer responses to catastrophic events for cat models themselves? A paper from the Society of Insurance Research and the Florida Catastrophic Storm Risk Management Center at Florida State University examines that…