Natural Hazard Catastrophe Modeling

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Insight and coverage to weather the storm

Models matter. Property insurance underwriters use modeling to understand their potential risks and exposures from catastrophic events such as hurricanes, earthquakes, floods, wildfires, and convective storms.

Insurers rely on models to offer both traditional and non-traditional CAT insurance solutions, using them to inform their approach to offering coverage in any given area, including:

  • The amount of limit and capacity to deploy
  • Their cost of capacity
  • Premium rates
  • Where program capacity will provide an optimal return on their cost of capital

Risk Strategies Property Insurance Practice puts this same modeling approach to work for you. We help clients understand their natural hazard catastrophe exposures throughout the world based on modeled results. Results from these modeling runs can be used to:

  • Establish limits that should be purchased,
  • Deductible and retention levels, and
  • Overall program structures

A model, however, is only as good as the data that informs it. Risk Strategies Property Insurance experts help clients “scrub” their risk and value information to ensure modeling results have a high degree of accuracy and reliability.

Modeling results are reviewed with clients to explain the identified risks and offer advice on the best ways to protect against their costs, which may include:

  • Embedding coverage in the property “All Risk” policy,
  • Creating a standalone difference in conditions (DIC) policy
  • Alternative risk solutions like parametric insurance and catastrophe bonds

Working with Risk Strategies Risk Management Practice and accredited third-party partners, our Property Insurance team also helps clients take actions that reduce their exposure to natural hazard catastrophes and reduce the potential for loss.

Practice Leadership

Carl Smith

National Property Practice Leader and International Practice Leader

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