“The classic approach for insurance companies is to produce statistics, look at what happened in the past, about these losses that we paid out for, and reproduce that in the future,” explains Simon Blackier, director of reinsurance, natural risks and technical projects at Generali.
Insurance companies employ estimators who use mathematics, statistics and data to model the future in ways that help companies manage the financial impact of the risks they insure.
Frédéric de Courtois, Deputy General Manager of the French insurance company AXA, explains: “Historically, the role of the insurance company has always been to rely on the past, that is, on history, and on data. It is clear that this is still important, but today, the changes have become so great that we must “To look at the future and try to predict it.”
De Courtois says, “We live in a world of multiple crises,” meaning, “There is a multiplication of crises and an interconnection between them.” To address it, one solution is to “invest increasingly in human capital and new skills: with meteorologists, sociologists, and experts in different fields.”
For its part, the Italian insurance company “Generali” established in France in 2015 what it called the “Generali Climate Laboratory”, with the aim of “better monitoring, better understanding, better analysis, and better preventing climate problems,” as Simon Blaquier, who also runs this laboratory, explains. .
The lab has a multidisciplinary team of about a dozen people, including “classic insurance jobs with estimators and data scientists to process the data,” but also “more people with scientific skills around climate science: hydrologists, hydraulic engineers, cartographers.” Specializations even include political science, for people who “have been able to work in departments,” according to Blackiere.
Setting a price for risk
The German reinsurance company Munich Re, which insures insurance companies, employed “its first meteorologist in 1974, and today the company employs about 30 experts, divided according to the type of risks, such as storms, earthquakes, and other natural disasters,” explains Tobias Grimm. , climate expert at a reinsurance company.
“My job, along with my colleagues, is to assess the risks associated with natural disasters around the world,” Grimm explains.
In effect, this means “we put a price on these risks whether it is a volcanic eruption, a landslide, a drought, or a hurricane. We must classify and quantify these risks. This forms the basis for the estimators who incorporate this information into risk models, and this will determine In the end, the price is what the client sees in his contract,” according to Grimm.
“These new skills are not only important for us to be able to employ, but collaboration between these different skills is an essential element,” De Courtois explains.
The estimator remains very important, but what is more important is “bringing everyone around the table to be able to analyze and have a future vision,” according to AXA’s executive vice president.
It depends Insurance companies And also reinsurance on academic research.
De Courtois recalls that the AXA Research Fund “also allows us to access the latest innovations, to the work of universities and researchers, and to understand how these risks will develop, and how our profession will change.”
Also at Munich Re, “we of course work in close cooperation with the academic world,” says Grimm, who explains that “many universities, doctoral students and professors are researching different aspects of natural disasters. We are in contact with many of them, collaborating on research projects and integrating these Knowledge in our models.
The Generali Climatic Laboratory includes three doctoral students working respectively in the field of drought, storm impacts, and hail modeling.
Insurance company losses
The value of insurance companies’ losses resulting from… Natural disasters The world transferred $60 billion during the first half of this year, an increase of 62 percent over the average losses in the first half of the year over the past ten years.
The research institute affiliated with the Swiss Reinsurance Company (Swiss Re), based in Zurich, stated that insurance company losses resulting from thunderstorms in the United States alone constituted about 70 percent.
In total, the storms resulted in $42 billion in insured losses globally in the first half of 2024. In the United States, 12 storms caused losses of $1 billion or more each.
