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Daily Insurance Industry News
Tuesday 23rd of January 2018
May 9, 2011

Aon Benfield lifts lid on catastrophe modelling

by Gill Montia

Story link: Aon Benfield lifts lid on catastrophe modelling

Aon Benfield lifts lid on catastrophe modelling

Aon Benfield will be making the case for more in-depth evaluation of catastrophe models at its International Analytics conference next week, with an emphasis on Solvency II.

The firm wants insurers to “drill deeper than the loss estimates” to understand how models actually perform.

The company reminds insurers that the industry has recent experience of both under and over estimating e.g. models overestimating the actual incurred loss in last year’s Chilean earthquake, and models underestimating US hurricane events’ actual incurred losses, over the past decade.

In addition, Aon Benfield warns that today’s Solvency II environment means users of model output need to be able to demonstrate an understanding of the inner workings of their “black box” models.

Aon Benfield Analytics head of international catastrophe management, Paul Miller, says: “Through our understanding of the robustness of each catastrophe model and assessing its uncertainty, insurers are armed with the necessary information to make appropriate adjustments to the models’ output.”

 

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