Aon Benfield quantifies cat model doubt

Impact Forecasting, the catastrophe model development centre owned by Aon Benfield, has launched a suite of tools that it claims can quantify uncertainties in catastrophe models across all perils and territories.

Several recent catastrophe events including the Thailand flood and Japanese Tohoku earthquake in 2011 highlighted the need for the insurance industry to better evaluate and understand the uncertainty linked with the loss estimates calculated by catastrophe models.

The new Impact Forecasting tools help quantify identified uncertainties in the hazard, location and vulnerability components of catastrophe models. The tools are integrated with ELEMENTS 8, the new version of Impact Forecasting’s loss calculation platform which also offers a new range of scenario models.

“The entire process of catastrophe modelling comprises various uncertainties,” said Adam Podlaha, international head of Impact Forecasting.

“These are inherently present in the different stages of the process – from the decisions taken during the model development phase and in the preparation of portfolio data, to the way the model is used by the analyst or in the interpretation of the results. These new tools enable insurers and reinsurers to visualise the range of uncertainties and make business decisions based on their individual risk appetites.”