In this video interview with The Insurer TV, Josh Darr, Global Head of Peril Advisory, discusses a variety of factors affecting the reinsurance marketplace, emphasizing how severe convective storm (SCS) losses are receiving a “tremendous amount of attention” on the modeling front, in the US and throughout the world.
“I think we're still really struggling to get our arms around SCS,” Josh explained. “It's 3 different perils, right–it's wind, it's hail, it's tornado, and it can be the convolution of 2 or 3 of those at the same time.”
He indicates that Guy Carpenter has been doing “a lot of work on” SCS due to its impact on both clients and the industry. He notes the importance of looking closely at climate change before holding it primarily responsible for driving the unpredictability of SCS losses.
“One of the things we're seeing when it comes to that peril is that the contribution of a changing climate is actually a minority of the contribution of loss increases—but overall, we'd say severe convective storm is arguably the most uncertain of perils, as the knowledge of the science and the data available is not as great and as accurate as other perils,” Josh continues.
He also notes how he is “pretty confident” that an increase in severity and frequency of precipitation-based perils is associated with climate change. With the correlation between climate change and the likelihood of some natural catastrophes established, Josh sees the industry as having a “social obligation” in encouraging climate finance.
“We have made a lot of strides in quantifying weather volatility and its association with climate, and that journey continues on,” he continues. “Now that we have that baseline of understanding, then it's almost our social obligation as an insurance industry, a social good you might even say, to pivot towards actioning climate finance in a way that could build adaptation resiliency measures.”
Click image below to view the full video.
