Here we review recent GC Capital Ideas posts covering insights on modeling.
Wildfire Risk and Underwriting Strategy: In 2018, California suffered its most costly and deadly fire season to date. The year’s costliest insured loss event was California’s Camp Fire at USD 12 billion — also the most destructive fire in the state’s history. Additionally in 2018, over 100 people perished in wildfires in Greece; British Columbia, Canada, suffered its worst wildfire season in history; in Australia, bushfires burned on Sydney’s perimeters. Wildfires have become larger and more severe, according to Robert Reader, Managing Director, Guy Carpenter.
Methodological Considerations in the Statistical Modeling of Catastrophe Bond Prices: John Major has authored an article that aims to help actuaries, financial analysts, statisticians, data scientists and their clients better investigate how property catastrophe risk, and particularly catastrophe bonds, are priced. The article addresses from a methodological perspective and frames in a business context the problem of specifying and fitting a statistical model of the pricing of property catastrophe risk.
Terror – The Role of Technology and Analytics: Terrorism, political violence and other malicious acts differ from other insurable perils in that they are dynamic and adaptive; there is human intent driving the probability and willing the impacts to change. Historic incidents show past trends, but those are only partial drivers of future trends as terrorists adapt their tactics in response to past effectiveness and current circumstances. Additionally, the frequency of past successful attacks does not reveal the entirety of historic threat: unfulfilled, foiled, failed, redirected attacks, or those with unintended consequences, according to Stephen Hudson, Head of Terrorism, Global Strategic Advisory, Guy Carpenter.
Do Real-Time Event Loss Estimates Inform Model Fitness: Catastrophe model vendors release tools to support assessment of portfolio losses following significant industry events. Guy Carpenter’s general observation is that there are more underestimations than over estimations of events, globally. In this series, we explore this bias and address its relationship to model fitness, according to Imelda Powers, Senior Cat Management Advisor – Asia Pacific, Guy Carpenter.