Posted on 11 Jul 2011
Aon Benfield, the global reinsurance intermediary and capital advisor of Aon Corporation, today reports that catastrophic losses in the first quarter and Solvency II are driving the need for insurers to boost their understanding of non-modelled perils.
In response, the Aon Benfield UCL Hazard Centre is hosting a seminar entitled ‘Getting to grips with non-modeled perils’ on 20 July to focus on the hazard and vulnerability characteristics of tsunamis, volcanoes and landslides that insurers should know and consider when assessing their risks.
Tsunamis generated by the Japan and Chile earthquakes, plus the disruption caused by the Icelandic and Chilean volcanic eruptions, are recent illustrations of why insurers need to better understand how non-modelled perils could impact their portfolios. Estimates of risk must include how these perils contribute to insurance losses and how they link to modelled perils, such as earthquake and windstorm.
Paul Miller, head of International Catastrophe Management at Aon Benfield Analytics, said: “It’s crucial to understand what exactly catastrophe models do and do not model. In Japan, for instance, we have seen considerable losses from non-modelled sources, especially the tsunami and the knock-on implication affecting contingent business interruption. At Aon Benfield we work closely with insurers to identify and account for non-modelled perils, ensuring they have a more accurate view of their overall catastrophe risk.”
The Aon Benfield UCL Hazard Centre, a member of Aon Benfield Research’s academic and industry collaboration, is working with Aon Benfield to apply scientific and technical knowledge in model development and catastrophe management to create a more accurate picture of insurers’ overall catastrophe risk.
Dr Steve Edwards of the Aon Benfield UCL Hazard Centre, added: “The seminar is designed to highlight the important characteristics of the key non-modelled perils, which insurers should know and consider when assessing their risks. For example, around 80% of damaging tsunamis are produced by earthquakes, but other significant sources include volcanic eruptions, volcanic island collapses and submarine landslides. We are working closely with the insurance industry to understand what research and knowledge are needed – regarding both tsunami hazards and the vulnerability of insured assets – in order to produce useful and accurate tsunami catastrophe models.”