Understanding atmospheric peril risk across re/insurance portfolios
Natural disasters that are associated to the atmosphere (known as atmospheric perils) such as hurricanes, tornadoes and hail, flooding, drought, and wildfire, caused over $100 billion in damage throughout the world in 2015. Insurance companies often cannot afford to be responsible when such catastrophes occur, and so they purchase insurance to protect themselves (called reinsurance) from these large risks. In the case of atmospheric perils, the damage that is caused is spread unevenly throughout the world and strongly influenced by features of the climate system such as the temperature of the ocean. Currently, reinsurance companies do not take advantage of these critical features of atmospheric perils. Our study of how the geographic patterns of atmospheric perils affect our client?s reinsurance investments will enable the partner to better manage its risk, and therefore reduce costs and improve protection to clients.