Aon Benfield, the reinsurance and capital advisor arm of broker Aon plc, has launched ReMetrica for Life, Health & Pensions, bringing stochastic risk modelling to these lines of business, to assist with evaluating risks and reinsurance purchases.
Aon Benfield says that life insurers, reinsurers and also pension funds are being driven by stake holders to shift from traditional scenario-based modelling to develop a stochastic view of their key risks. Stochastic modelling allows companies to take into account the frequency and duration of events that could trigger claims, as well as exploring their variations to allow for uncertainties in the results.
With the new ReMetrica Aon Benfield aims to provide a fully stochastic framework which empowers insurers, reinsurers and their actuaries to optimise capital requirements, conduct stress tests, improve Solvency II infrastructure, evaluate reinsurance structures, model within their risk appetite and model new business deterministically or stochastically helping to determine future strategy.
For life insurance and reinsurance firms, as well as any insurance-linked securities (ILS) fund managers allocating capital to life deals, ReMetrica will model any life product such as term assurance, endowments and whole of life, as well as allowing for modelling and analysis of extreme events including pandemics or a mass lapse shock that is correlated to an economic variable.
For pensions and annuities players, ReMetrica will assist with their understanding of longevity risks, using stochastic longevity models and enabling modelling of longevity swap reinsurance structures.
The platform also supports multi-state modelling for health insurers and reinsurers as well as modelling of any long-term liabilities, such as motor periodic payment orders and workers’ compensation. The multi-state modelling also means that actuaries can now map the journey of policyholders throughout their lives. ReMetrica can apply this to all lines of business including assurance and annuities.
Irfan Akhtar, head of development for ReMetrica for Life, Health & Pensions, commented; “Aon Benfield has undertaken extensive development over the last four years to bring the best of ReMetrica’s stochastic modelling to its life, health and pensions clients. Unlike most of its peers, the platform has been built as a stochastic tool from inception, rather than simply adding to a deterministic model, and also uses a ground-breaking approach to modelling multi-states.”
The tool will assist life, health and pensions insurers and reinsurers to evaluate different forms of capital and instruments for their reinsurance and risk transfer needs. It will likely also prove useful for ILS managers seeking to manage portfolios of life, health or longevity related risks.