UK-based weather forecaster the Met Office has turned its focus to the capital markets with a new Euro Windstorm Event Response service to provide insurers, reinsurers, insurance-linked security (ILS) players and brokers with a comprehensive view of European weather-related risk.
As part of their risk-modeling and weather or climate analytics product suite the Met Office is set to provide the ILS market with more than 6,000 historical European storm footprints, enabling a greater understanding into the probability, severity, location and projected route of weather events.
The service offers daily updates of current storms expected trajectory and severity, coupled with a historic footprint of a previous storm of similar scope to provide a detailed potential outcome.
Head of Science for Insurance and Capital Markets at the Met Office, Paul Maisey said; “Insurers are always under scrutiny to ensure that they can meet their obligations after extreme natural events. As an independent scientific organisation we can bring some real insight into the hazard component of the risk calculation.”
Wind is the costliest natural event to the European insurance and reinsurance market, and climate change is pointing to an increase in events like storm Ela, which struck Germany in June this year causing insured losses of more than $2 billion.
So having a tool that can accurately predict potential losses and identify vulnerable European regions is of high importance to traditional reinsurance firms, ILS funds offering collateralized reinsurance, catastrophe bond issuers and the wider capital markets.
The Met Office’s ‘Historical Windstorm Catalogue’ utilises analysis from almost 40 years of storm observations across Europe, and the company firmly believes that; “Getting the response level right is critical for customer satisfaction and financial performance.”
A feature of the service is allowing risk analysts and actuaries to be capable of measuring potential risks at a local level, using their detailed Euro Hazard Maps, and then apply these factors to calculate accurate rate settings.
The organisations offerings can also benefit specialty property & casualty players, offering site-specific wind climate analysis to 100-meter resolution. Parameters for this aspect of the risk-modeling product includes wind speed, direction, shear, exceedance values and turbulence intensity.
Looking to the future Paul Maisey added; “These are early days for us in the industry but the signs are that the team’s Euro Windstorm services will be well received.”
The Met Office has adapted the insurance section of its website specifically to target the reinsurance convergence sector, ILS and catastrophe bond issuers, it appears. The organisation clearly sees an opportunity for it to capitalise on the growing interest in ILS and reinsurance as an asset class, by becoming a weather and climate data provider to the sector.