Following its launch in 2014, not-for-profit catastrophe risk organisation, Oasis Loss Modelling Framework (Oasis), has announced a global endorsement that will enable vital funding for insuring against climate risks.
Launched in January 2014 after several years of development as an independent framework and risk-modelling platform for the insurance industry, Oasis looks to reduce the cost of modelling and enable transparency and flexibility for users.
And now, the organisation has received international endorsement to expand insurance solutions for vulnerable regions against the risks of climate change, ultimately enabling greater insurance and reinsurance penetration across the globe.
Oasis explains that the new venture, The Oasis Platform for Catastrophe and Climate Change Risk Assessment, is a collaborative effort between Oasis and Imperial College, and has an opportunity to invite grants to supports its goal of improving the management and understanding of property exposures in territories susceptible to climate-related disasters.
The new funding has come from a range of sources, including the U.K., U.S., and other governments, private sector entities and the Global Innovation Lab for Climate Finance (The Lab).
Interestingly, The Lab, which operates as a public/private driver for investment in climate change mitigation and adaptation improvements, estimates that $10 million to $14 million “invested in piloting the Oasis platform in three Asian countries could indirectly facilitate up to $6 billion in new property insurance coverage,” says Oasis.
Dickie Whitaker, Chief Executive Officer (CEO) of Oasis, said; “We are delighted to achieve this endorsement and see it as a key element in achieving the vision for Oasis of supporting developing countries in mitigating the impact of extreme weather and climate change.
“Greater understanding of climate change and extreme weather risks in these territories can facilitate the development of significantly more re/insurance capacity and reduce the protection gap.”
Bridging the global protection gap (difference between economic and insured losses post-event) is seen as a vast opportunity for insurers, reinsurers, and also insurance-linked securities (ILS) players, particularly at times of heightened market pressure and competition.
Emerging markets are often extremely vulnerable to natural disasters, which some believe will become more severe and frequent owing to the impacts of climate change, and as such the development of innovative, affordable solutions for these regions will protect economies while providing re/insurers with another, much-needed profit avenue.
The potential impacts of climate change are far-reaching and remain uncertain, so the development of tools such as this from Oasis and Imperial College, could provide invaluable in increasing the understanding of climate-related events in vulnerable territories.
The greater the understanding of the exposures the better insurers, reinsurers, and ILS players will be able to develop adequate, and affordable solutions that will provide those in need with cover against climate-related events. And, at the same time offer risk transfer counterparties with the potential to generate profits from a diversifying peril region.