In this article in Insurance Asia News, Guy Carpenter’s Mark Weatherhead, Managing Director, Head of Analytics & Advisory, South-East Asia and Korea, discusses how insurance companies should be prepared to invest in building technical understanding to manage their portfolios effectively.
Catastrophe models figure prominently in the (re)insurance industry’s ability to effectively manage risk and reduce loss events amid significant climate shifts. However, they pose challenges to model calibration and validation.
“Model vendors should balance the need for consistency to ensure there are no dramatic shifts in modelling results, with the requirement to incorporate climate change and improved scientific data for reliable risk assessment. Regular model updates are necessary due to evolving scientific views, exposure changes and regulatory factors.”