AIR launches industry's first severe thunderstorm model for Australia
Catastrophe risk modeling firm AIR Worldwide, a Verisk Analytics business, has launched the industry’s first comprehensive severe thunderstorm model for Australia that explicitly captures all three sub-perils — hail, tornado, and straight-line wind - to help companies assess and manage severe thunderstorm risk.
"In Australia, insurance losses from severe thunderstorms are greater than those from other natural perils such as earthquakes, tropical cyclones, bushfires, or floods," said Dr. Eric Robinson, manager and principal scientist, AIR Worldwide. "Because aggregate losses from severe thunderstorms can result in extreme volatility in financial results, a robust view of the risk is critical for organisations developing resilience strategies."
The new model for Australia simulates daily severe thunderstorm activity based on historical occurrence rates and local and seasonal weather patterns. The daily simulation enables the model to capture both the large outbreaks that produce insured losses in excess of A$10 million, the ICA threshold for a catastrophe, and smaller events that may last only one day, but that could still impact a company’s portfolio on an aggregate basis, or a more rural portfolio on an occurrence basis.
Robinson commented: "Loss potential is increasing as property replacement values rise in the densely populated cities of Australia, and the number of insurable exposures continues to grow as development expands into previously unpopulated areas.
"Insurers are looking for innovative tools that can help them better manage this growing risk by capturing the impact of both large and small loss-causing events, as well as accounting for the highly-localized effects of straight-line winds, hail, and tornadoes. Our new model does this by integrating statistical modeling with the latest meteorological research."
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