Lighthill Network Warns of Underpricing
The Lighthill Risk Network has warned that certain insurance risks are currently underpriced.
The not-for-profit network forms part of the Lighthill Institute of Mathematical Sciences, based at University College London, and it aims to bring together scientific research, the insurance industry, government and third party organisations to exchanging expertise.
Its director, Peter Taylor, is recommending that catastrophe modellers, who undertake risk analysis, need to address a number of key issues.
For example, current catastrophe models assume independence but event dependence needs to be taken into account as it is possible for one earthquake to trigger other earthquakes.
Account also has to be taken of risks that have no model, such as terrorism, and emerging risks that do not form part of standard modelling procedures.
The Lighthill Network is also recommending an opening up of the risk modelling sector, which it believes could benefit from input from academia and hedge funds, amongst others.
Category: Insurance News
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