Predicting the Unpredictable
Demographic shifts, increasing global interdependencies and climate change all play a role in weather-related insurance losses. Such losses have increased 15-fold over the last few decades, implying high risk and volatility for the insurance industry. Mitigating against this requires a distinct catastrophe risk management approach.
At Allianz Re, our meteorologists, hydrologists, seismologists, geographers and mathematicians currently model around 50 nat cat scenarios for the Allianz Group, with data captured using best-in-class standards. Applying their understanding of these perils to the Allianz portfolio with its insured values, they assess its overall nat cat risk. Vendor and in-house applications build a quick picture of risk accumulation in any defined location, forming the basis for effective risk management measures.
Nat Cat Management
The Nat Cat team at Allianz Re categorizes the management cycle into three components:
Major Natural Catastrophes include windstorms, floods, earthquakes.
Hurricane Katrina, Cyclone Yasi, Winterstorm Kyrill – who would know better the potential damage of such extreme weather events than meteorologists? At Allianz Re, our meteorologists analyze single events to evaluate future trends and Allianz's overall exposure from wind perils. Wind speed, location at landfall and the tract of a storm can decide whether the event causes a major loss to the Allianz book of business or not.
Water can affect insured property in different ways, causing anything from minor damage to complete devastation. Flash floods after heavy rain can strike almost without warnings, levels along rivers can rise more slowly, or storm surges can wipe out large coastal areas.
Models used in the insurance industry need to consider the complex interaction of rainfall, topography and climatological pre-conditions and correlate these with the insured property. Our hydrologists use state-of-the-art technology to monitor this destructive natural peril.
Earthquakes are sudden and highly destructive movements of the earth. The level of destruction depends on the depth, size and direction of the earthquake fault and the magnitude of energy it releases. Other factors such as soil condition and construction quality also play a part in determining whether a building will withstand the tremor or collapse.
At Allianz Re, our seismologists take all these factors into consideration when assessing the possible impact of an earthquake on the values insured with Allianz.