In this Insurance Asia News article from the Singapore International Reinsurance Conference (SIRC), Mark Weatherhead, Managing Director and Head of Analytics for Southeast Asia and the Pacific, described how the majority of models used operationally in Asia Pacific do not account for the recent increasing frequency of extreme weather events. However, newer generation of cat models do have capabilities to produce alternative views, which include loadings for climate scenarios.
“When catastrophe models are built, typically, the hazard module is locked down first and then the model is calibrated. As such, there is a delay between when the hazard is set and the model is released,” Mark said.
“In the past, this wasn’t a significant issue, and the models were considered fit for current near-climate modelling, but given the rate of change now observed, they fall out of date quickly.”