Cat risk team of the year: Aon, Impact Forecasting
In a world with increasing exposures, coupled with more intense natural and man-made perils, improvements in catastrophe models are vital in helping re/insurers analyse risk more accurately.
In 2018 alone, natural disasters such as intense tropical cyclones, record-breaking wildfires, severe drought and widespread seasonal flooding led to economic damage of $225bn, and insured losses of more than $80bn.
Catastrophe models play a crucial role in portfolio optimisation, pricing and capital setting – and also in helping close the "protection gap", enabling insurers to provide coverage where none existed before.
Impact Forecasting, Aon Benfield's catastrophe model development centre of excellence, has a strong breadth of model coverage with over 100 probabilistic and scenario models spanning 10 perils and over 60 territories.
It is also known for its collaborative approach, and partners with academic and industry organisations around the world to incorporate the latest research into its catastrophe models.
For example, Impact Forecasting has expanded partnerships with organisations like Global Earthquake Model and Fathom to give re/insurers access to other model providers and deliver more choice.
Innovations from Impact Forecasting in 2018 included the release of a number of new catastrophe models. This has included a new wildfire model for the US incorporating lessons learned following the 2017 and 2018 California wildfires.
Other new releases included hail models for mainland Europe covering Germany, Austria, France and the Netherlands.
The judges were impressed with Impact Forecasting's automated event response service for European windstorm and US hurricane, which provides loss projections for an insurer's portfolio, up to 72 hours ahead of a storm making landfall.
Such a proactive feature takes the use of catastrophe models beyond pricing and into risk mitigation, said the judges.