Improvements in pricing, an increase in capacity and better risk management are among some of these things that result from a better understanding of the risks.


“We believe that a better understanding of risk leads to better risk management decisions,” says Fullam. “Better risk management systems leads to improvement in the bottom line. One of the best ways to do this is to build robust and reliable models which give insurers a better understanding of their risk.


“Improved catastrophe casualty modelling would provide re/insurers with an increased view of their risk as well as the potential for additional scenario analysis, allowing them to more appropriately price and reserve the risk. With advanced models, re/insurers would be able to tailor products to match their policyholders’ needs. This in turn will likely lead to better risk management 


Larsen adds: “Improving casualty models involves improving the


location information—enabling insurers and reinsurers to annotate important building and location risk information to the policy information, information that the policyholder may not even know.


“Expanding catastrophe modelling to liability lines is a natural progression for the market.” Tom Larsen, EQECAT


“Expanding catastrophe modelling to liability lines is a natural


progression for the market, as a renewed focus on enterprise risk management is promoting the ability to rationally model all the insurance risks covered by insurers and reinsurers.”


Folkman echoes the views of Gotham, Fullam and Larsen, saying that


advanced modelling would have a direct advantage to the stakeholders, policyholders and the general economy.


“If insurers understand the risk better, they’ll be able to provide more capacity and broader coverage at a lower price,” he says.


          


Spring 2015 | INTELLIGENT INSURER | 25


SHUTTERSTOCK / KRUGLOV_ORDA


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