European windstorm competes climate risk model suite
A few years ago, modeller Moody’s RMS had a vision to move to the next generation of modelling with a high definition (HD) model, which began with European flood.
“This year, we have the last big piece on climate risk, which is European windstorm,” said Laurent Marescot, senior director, market and product expert EMEA/CIS at Moody’s RMS.
He explained that this is an important model because it is mostly used for treaties, for Solvency II and Prudential Regulation Authority regulations.
“This completes the view we have on climate risks in Europe,” he said.
Marescot said that secondary perils have been a hot topic at Baden-Baden this year, especially given the hail and flood events over the last few years. These include the 2021 flood event in Germany, hail in France in 2022, and now this year a big hailstorm in Italy.
He said: “The industry focus has been more on secondary perils, which are probably no longer secondary.”
He said these perils are linked to earning risks because on the balance sheet this earning risk is on the nat cat side and is controlled by secondary peril volatility.
“You can have no loss, massive loss, no loss, massive loss. This impact is hard to forecast, and I would say every company needs to be able to understand this kind of earning risk.”
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