casualty catastrophe

AIR Worldwide and Bermudian reinsurance firm RenaissanceRe are collaborating on the development of what they call the industry’s first probabilistic casualty catastrophe risk model, which the pair say will enhance the industry’s modeling of long-tail casualty risk.

Risk modelling firm AIR Worldwide will benefit from liability and casualty risk modelling abilities after parent company Verisk Analytics announced the acquisition of Arium, an independent company focused on liability risk modeling and decision support.

A catalyst for the growth of insurance-linked securities (ILS) in the property catastrophe reinsurance sector is the capabilities of third-party modelling, but a lack of predictive modelling within the casualty arena mitigates entry and impact of a similar scale, according to industry experts.

A new report published by the Lloyd’s of London insurance and reinsurance market concludes that by underpinning liability catastrophe models with big data techniques, opportunities could be found for the ILS market to get more deeply into casualty risks.

Exposures in the casualty insurance and reinsurance sector are inherently difficult to predict and model, meaning until a market transformation occurs the casualty space is likely the biggest threat to the re/insurance industry, according to Wills Re’s Andrew Newman.

While the reinsurance market remains challenging strategically sound business models become more important than ever and while casualty lines offer several structural advantages, this can mean higher barriers to entry, according to analysts at Goldman Sachs.

Reinsurance broker Willis Re has this morning announced the launch of a new global syndicated reinsurance facility, aiming to provide cedents with broad protection against casualty catastrophe events related to liability portfolios.

The practice of successfully and accurately modeling casualty or liability catastrophe risks is something that continues to prove difficult for insurance and reinsurance firms, making them most likely a slow area of expansion for ILS and alternative capital.