New tools help (re)insurers visualise the range of uncertainties
Impact Forecasting has launched tools to easily quantify uncertainties in catastrophe models across all perils and territories.
Devastating events, such as the Thailand flood and Japanese Tohoku earthquake in 2011, highlighted the need for (re)insurers better to evaluate the uncertainty linked with the loss estimates calculated by catastrophe models.
“The entire process of catastrophe modelling comprises various uncertainties,” said Impact Forecasting international head Adam Podlaha. “These are inherently present in the different stages of the process – from the decisions taken during the model development phase and in the preparation of portfolio data, to the way the model is used by the analyst or in the interpretation of the results. These new tools enable insurers and reinsurers to visualise the range of uncertainties and make business decisions based on their individual risk appetites.”
The tools help quantify identified uncertainties in the hazard, location and vulnerability components of catastrophe models. They are integrated with ELEMENTS 8, the new version of Impact Forecasting’s loss calculation platform. Key benefits for (re)insurers include:
- Standard method of defining uncertainty for different perils and territories;
- Ways to graphically visualise the size of uncertainty for per event and exceedance probability curves for different loss perspectives (from ground up, gross etc);
- Understanding the relative importance and impact of the various uncertainties across all model components; and
- Enhanced ability to make informed reinsurance decisions due to an improved knowledge of uncertainty.