September 2014 38 Bermuda:Re/insurance+ILS


deployed on-premises or in a cloud. One such technology is analytical clustered databases, often referred to as massively parallel processing (MPP) databases. This class of database technology provides superior performance and scalability over Microsoft SQL servers and can be deployed to any commodity hardware.


We’re also seeing growing interest in a hybrid cloud solution from companies that want on-demand elasticity without purchasing additional hardware or potentially compromising their data security. They do not have to move their entire modelling platform into the cloud, and certain types of data, including mission-critical or highly confidential ones, can always remain on the premises. They can tap additional computer capacity through cloud bursting as needed.


Cloud bursting allows a company to keep its modelling system and data within its data centres, while offloading some or all of the computational processing to the cloud during periods of high activity, such as during reinsurance renewals or for special projects.


Ultimately, the ability to weigh the costs and benefits of emerging technologies—and to dig beyond the hype—is a required skill today for insurance and reinsurance executives. Catastrophe modelling providers should offer a choice in deployment strategy, whether it’s a public or private cloud, an on-premises installation, a hybrid cloud solution, or as an integrated part of the model user’s own internal systems.


You mentioned the growing demand for expanded model coverage. What progress has been made recently?


Events such as the Thai floods and the Japanese tsunami in 2011 made it apparent that there are significant gaps in model coverage. Understanding non-modelled risk—whether from modelled perils in non-modelled regions (such as earthquake risk in the Middle East), from non-modelled perils and secondary perils (such as volcano and landslides), or from certain lines of business or coverages (marine cargo or contingent business interruption for example)—is becoming a top focus across the industry.


To help address these gaps, AIR is in the middle of the most


ambitious programme of model development in our history. Last year, we introduced fully probabilistic solutions for modelling Japan tsunami (and we’ll continue to add tsunami, landslide, and liquefaction modelling capabilities as our earthquake models are updated), as well as a global pandemic model.


This year, AIR is releasing the industry’s most detailed fully probabilistic model for US inland flood. To be done in a physically realistic manner, flood modelling requires enormous amounts of data at very high resolution because it’s a very localised peril. Recently available data sets, combined with more advanced technology and near exponential increases in computing power that allow for continuous simulation of the atmosphere, have allowed us to take on the challenge of modelling inland flood risk in the US (adding to previously available models for the UK and Germany).


“We’ve built a truly open software platform into which users can import third-party hazard data or even third-party models.”


For many regions of the world, this high quality data is simply not


available, which is why we have developed alternative solutions that help companies manage their accumulations and underwrite flood risk with more confidence. AIR’s probabilistic flood hazard maps have recently been released for China and Thailand, and maps for Brazil are on the way.


Looking forward to the next few years, our research roadmap includes new and expanded flood models, new atmospheric models for Canada, an overhauled storm surge model for US hurricane, a European severe thunderstorm model, and much more. However, we understand it’s not feasible for us to build models fast enough to meet industry demands, and there are third-party solutions that can greatly extend the scope of traditional catastrophe models.


That’s why we’ve built a truly open software platform into which users can import third-party hazard data or even third-party models. We’ve signed agreements with 12 organisations to embed their data directly within our platform to give our model users the widest view of global risk available. For example, through our partnership with IHS Inc, AIR clients can easily access a vast database of more than 5,000 terrorist targets across 88 countries, along with realistic location-level risk forecasts.


We’re in continuous discussion with other organisations to bring their data and models into our Touchstone platform, and we’re very excited about the value that this expanded view brings to our clients. 


Bill Churney is chief operating officer at AIR Worldwide. He can be contacted at: bchurney@air-worldwide.com


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