Dr. Jamie Rodney, Executive Director of ILS Analytics at financial investment supervisor Twelve Capital, has actually required more extensive cooperation between risk managers and catastrophe modellers.
Dr. Rodney’s comments came throughout our recent Prospectus 2021 conference, and looked into the work Twelve Capital has been doing to better understand typhoon danger particularly.
“From a cat model perspective– having worked and worked together with cat design vendors and having worked as a feline design supplier myself– there’s a great deal of cutting edge science, there’s a great deal of leading researchers dealing with this field,” he described.
Dr. Rodney included that, if you don’t open up the design, or work closely with feline model suppliers, you can’t genuinely understand what you’re changing.
“You could be introducing more bias to something that currently could be biased,” he noted. “I believe as a risk taker it’s all about understanding: what am I taking a look at? What is the unpredictability or the possible changes? And after that, again, it’s around risk margin.
“If you comprehend the risk then you can start discussing risk-adjusted, how much risk you wish to take.”
While climate change remains one of the main variables for feline threat suppliers, Dr. Rodney warned against overlooking other prospective unpredictabilities.
“We’re seeing other uncertainties, or potentially larger deltas, crazes like supply/demand and underwriting discipline,” he explained.
“Even during the 20 years of high-end activity– and I understand people talk about the typhoon drought between 2012 and 2017– that was a duration where from a prices perspective, rates declined dramatically. So, even within an altering or possibly warming climate, you had a window of five years of no losses.”
Dr. Rodney specified that, regardless of whether its statistically substantial or just luck of the draw, this highlights the significance of other uncertainties and should highlight other areas of possible volatility unrelated to environment change.