Ariel Re’s Vice-President Modelling and Research Elizabeth Harris was interviewed by Bermuda:Re+ILS on climate modelling. She told the publication that reinsurers use traditional, probabilistic methods to predict extreme weather, but that as climate change becomes better understood, cat models are evolving.
“To each historical event we assign a probability, which we split up into ‘more likely’ or ‘less likely’ events by their intensity, and we then benchmark our stochastic catalogues against what we have seen,” she said.
“That’s our only real data point. The main thing is that we’re largely writing annual contracts, so that’s just for the risk this year. The most important aspect of climate change for us to capture is that it has occurred during the course of our historical record, which we use to create our cat models.”
Read the full article here: https://www.bermudareinsurancemagazine.com/article/history-plays-its-part-in-climate-modelling