InsuranceERM Annual Awards 2023 - UK & Europe

Economic scenario generator software of the year: Moody's Analytics

Moody's Analytics stands out in this field for continuing to expand its economic scenario generation solutions.

The provider has made enhancements in many areas, such as the Cloud Burst Service that lets users run the scenario generator in the Moody's Analytics hosted cloud environment.

InsuranceERM's judges also praised the firm's proactive approach with clients and regulators. This was clearly evidenced in 2022 when developed markets experienced some of the highest levels of inflation over the last 30 or 40 years.

During this period Moody's Analytics engaged with its clients and regulators on the impact of inflation rates in its stochastic models. It delivered stress testing calibrations for different expected paths of inflation in order to support firms looking to understand the sensitivities of their key capital metrics.

Furthermore, the firm provided additional beta-calibrations to allow insurers to test alternative assumptions and parameterisation of the inflation model to support their discussions with internal and external stakeholders.

Moody's Analytics also recognises the need to support insurers in managing climate risk and its Climate Pathway Scenario Service is one such mechanism for achieving this. The tool uses scenario generation to facilitate customers' efforts to respond to Orsa and TCFD requirements to quantify the financial impact from physical and transitional risks.

A spokesperson for Moody's Analytics says in the future it expect to see more developments and a broader range of data and factors included in its climate conditioned models.

The spokesperson says: "Combining our financial modelling framework with the best climate science consensus, enables customers to understand the financial impacts of climate change, which is a significant focus area for the future. Bringing together our expertise in climate, natural catastrophes, economic and market risk offers insurers a deeper understanding of a more integrated approach in this challenging area."