Reinsurance needs better secondary perils modelling

The reinsurance industry needs to do much better at modelling second perils in order to price the risk better, according to  Mapfre Re chief underwriting officer Javier San Basilio.

San Basilio, who is also deputy general manager of the Spanish reinsurer, said the sector needs to reduce the protection gap, citing the recent earthquake in Morocco.

Noting that the first half of the year had brought catastrophe losses of $50 billion, almost entirely from secondary perils, he said: “We tend to call them secondary perils even though they’re not secondary any more.

“Perils pop up everywhere. This is something we don’t capture well in our models, our underwriting or our pricing. The industry needs to put more focus on it.