Aon updates UK terrorism cat model
Aon Benfield has updated its UK terrorism catastrophe model, including estimates of the financial loss to life insurers, in a move aimed at helping to satisfy the requirements of Solvency II.
The new model simulates attacks on more than 2,000 potential UK targets, including places of worship, financial centres, infrastructure, government and military locations.
For each simulated event, it forecasts the consequent impact on an insurer’s exposures which can be used to assess potential financial losses from injuries and deaths.
The real-world approach highlights the likelihood and probable impact of unconventional attack types, such as chemical, biological and nuclear terrorism.
Damage impact is calculated by modelling dispersion of chemical and radioactive particles, amongst other effects, in addition to blast and thermal impacts.
The expected effect of state mitigation on frequency in the aftermath of a major attack is also taken into account, alongside the expected dynamic interaction between terrorist groups and prevention agencies.
Aon Benfield’s international head of impact forecasting, Adam Podlaha, comments: “Working with ex-military and security professionals with real-life experience of the impact of terror attacks means we have been able to build a model based on a set of practical and realistic scenarios.”
Scott Reid, life actuary and reinsurance broker at the firm, adds: “Solvency II has been the catalyst to the further development of our terrorism loss model.
“Using expert judgment, we help insurers understand their exposures and optimise the transfer of their risks to the reinsurance market.”
Category: Aon News, Life Insurance News
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