Lighthill Risk Network and Flood Re launch research project to identify key...
Flood Re and Lighthill Risk Network Back Collaborative Project with Leading (Re)Insurers and brokers to identify Flood Hazard Research Priorities
Lighthill Risk Network and Flood Re launch research project to identify key areas of industry needs on Flood Risk Modelling.
London, 13 May 2019: Research collaboration organisation, Lighthill Risk Network Ltd (Lighthill), is delighted to announce its support for a major collaborative risk research project, together with joint government and insurance initiative Flood Re.
Flood Re and Lighthill have launched a report “Flood Research Needs of the (Re)insurance sector: collaborating to improve risk understanding and management” which compiles input from Willis Re, Guy Carpenter, Direct Line, Lloyds TSB, Aspen, Allianz, SCOR, and Swiss Re, to identify priorities for Flood Risk Modelling.
Flood risk is a particularly challenging peril to model – losses are rising, and the risk is evolving thanks to trends such as urbanisation, more buildings in exposed areas, failed land-use practices, and climate change.
The report establishes a prioritised list of challenges and questions that the insurance industry has on flood risk modelling to feed into academic priorities and upcoming funding calls.
The highest-ranked research priority is vulnerability curves – (re)insurers feel current damage ratios oversimplify the reality of damage distributions. This is followed by the correlation of rainfall/flood and windstorm hazards – (re)insurers would like to assess the contribution of flood losses to wind events and vice versa.
Further results from the exercise will be distributed on 18-19 June, 2019, at the at the London conference of not-for-profit catastrophe modelling platform Oasis Loss Modelling Framework.
Lighthill Chief Executive Dickie Whitaker said:
“We are delighted to support this pioneering and collaborative initiative to prioritise and improve the (re)insurance industry’s understanding of and modelling for flood risk and its collaboration with academia.
Compared to other sectors, (re)insurance has not been prominent on academic research spending. One of the roles of the Lighthill Risk Network in this initiative is to improve the linkages between academia and the (re)insurance Industry – aggregating large companies to help fund research and bridge this gap.
We want to draw knowledge and innovation from academia into insurance and help improve flood model methodologies and development, as well as support end-user validation of flood models, and help improve accuracy of results through improved input data.
Collaborating with key reinsurers and government insurance initiative Flood Re is critical to the success of this research project, which could have a global impact and transform the way we understand and manage flood risks, helping us better mitigate these risks and model for them.”
Gary McInally, Chief Actuary of Flood Re, said:
“Our in-house experts, together with the team at The Lighthill Risk Network, have identified the key challenges that the reinsurance industry is facing with modelling flood risk. Flood risk modelling and the production and use of related underwriting tools, is challenging but essential for insurer understanding of risk and appropriate pricing of policies.
We hope that this report will inform and encourage further research into how flood risk modelling can be improved, which will help us and the wider industry to better understand flooding and support more people living in flood prone areas.”
Access the report Flood Research Needs of the (Re)Insurance sector: collaborating to improve risk understanding and management here: https://lighthillrisknetwork.org/reports/
Notes to editors
About Lighthill Risk Network
The Lighthill Risk Network Facilitates and enhances knowledge transfer into from academic, government and commercial experts at the forefront of risk-related research. It is backed and funded by Aon, MS Amlin, Liberty, Guy Carpenter, Lloyd’s and Hiscox.
https://lighthillrisknetwork.org/
About Flood Re
Flood Re is a joint initiative between the Government and insurers. Its aim is to make the flood cover part of household insurance policies more affordable.
About Oasis Loss Modelling Framework
Oasis Loss Modelling Framework (Oasis LMF) is a not-for-profit company founded in 2012 to open up the world of cat modelling. It is collectively owned by close to 40 of the world’s leading insurers, reinsurers, brokers and financial institutions.
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Ground-Breaking Reports Launched Exploring Catastrophic Shock Risk Scenario Development for Insurance and Disaster Risk Reduction in Developing Countries
Cambridge Centre for Risk Studies and The Lighthill Risk Network, Co-Funded by Lloyd’s Tercentenary Research Foundation, release Duo of Reports: Developing Scenarios for the Insurance Industry and Developing Scenarios for Disaster Risk Reduction to provide best practice tools for catastrophic shock scenarios which trigger severe losses and adversely impact developing countries.
London, 10 March, 2020: Research collaboration organisation, Lighthill Risk Network Ltd (Lighthill), is delighted to announce the launch of two major new reports, Developing Scenarios for the Insurance Industry and Developing Scenarios for Disaster Risk Reduction, produced in partnership with the Cambridge Centre for Risk Studies and co-funded by the Lloyd’s Tercentenary Research Foundation.
The result of linking leading academics with senior insurance professionals, the reports provide a practice scenario planning tools for the insurance industry and governments, particularly of developing countries, when considering the outcomes of catastrophic shock risk scenarios.
Scenarios are increasingly being used by underwriters, analysts, risk managers, actuaries, and other stakeholders in the (re)insurance community to better understand and stress test the characteristics and consequences of unknown, uncertain, or unexpected future events.
Developing Scenarios for the Insurance Industry addresses scenario best practices in the insurance industry, with the case study example of a Cyber Blackout event, exploring the interlinked nature of such events and its global financial ramifications.
Developing Scenarios for Disaster Risk Reduction addresses the ever more complex and interconnected disaster risk landscape, with the potential for disasters – including natural catastrophes – to cascade through global systems increasing, with disproportionately negative impacts on developing countries.
Both reports benefited from the input of leading insurance experts from the Lighthill, whose members include senior representatives from Guy Carpenter, Liberty Mutual, Aon, Hiscox, Lloyd’s, and MS Amlin.
Professor Danny Ralph, Academic Director of the Cambridge Centre for Risk Studies, said:
“The Cambridge Centre for Risk Studies is proud to have collaborated with the insurance and disaster risk communities to provide novel insights and guidance on scenario development.
Scenarios are a critical tool to address and understand an increasingly complex landscape of systemic and emerging risks. We use scenarios to engage effectively with organisations, capturing creative thinking about plausible futures. Scenarios should be understood not as predictions but as stress tests to assess an organisation’s capacity to be resilient.
In the context of disaster risk, scenario analysis is widely advocated and applied but remains a challenge to many stakeholders without experience in scenario development. We hope to support a wider application of scenarios to understand potential disaster impacts and the efficacy of decisions to address them.”
Professor Danny Ralph, Academic Director of the Cambridge Centre for Risk Studies, said:
“From climate change, which disproportionately impacts developing countries, to the rapidly evolving field of cyber risk – the potential for disasters to cascade through systems is increasing.
It is critical that the insurance sector as well as governments and disaster risk management agencies have a common framework for best practice when considering and planning for potential catastrophic shock scenarios.
Reducing disaster risk requires powerful and concerted cross-sector effort if we are to develop strategies to better understand and manage risk, and ultimately improve resilience.
I welcome the launch of this duo of reports and the laudable collaboration between the insurance community and academia that they represent, and I hope they will support scenario development best practice and further conversations between the insurance and risk management sector, governments and academia going forwards.”
Professor Danny Ralph, Academic Director of the Cambridge Centre for Risk Studies, said:
“I’m very pleased to be announcing the launch of the Developing Scenarios for the Insurance Industry and Developing Scenarios for Disaster Risk Reduction reports in partnership with the Cambridge Centre for Risk Studies and Lloyd’s today – the result of months of research and collaboration between academics and the insurance industry with a very serious and relevant purpose in mind.
As societies and economies develop and become more interconnected, major disasters have the potential to trigger severe losses across a potential range of insurance classes, and so represent acute operational risks to insurers and indeed economies and societies as a whole.
We hope these reports will provide useful scenario development best practice tools for the insurance industry and for governments, help stimulate further discussion, and prompt more insurers to connect with academic institutions and governments to continue the research.
Ultimately we intend to support societies and economies in better coping with uncertainty, especially in the case of risks that are not well understood or cannot be quantified or even identified.”
Access both reports here: https://lighthillrisknetwork.org/reports/
Notes to editors
About Lighthill Risk Network
The Lighthill Risk Network is an all-encompassing and inclusive organisation with the specific aim of facilitating and enhancing knowledge transfer into business from academic, government and commercial experts at the forefront of risk-related research.
https://lighthillrisknetwork.org/
About the Cambridge Centre for Risk Studies
The Cambridge Centre for Risk Studies at the University of Cambridge Judge Business School provides frameworks for recognising, assessing and managing the impacts of systemic threats. To test our research outputs and guide our research agenda, the Centre engages with the business community, government policy makers, regulators and industry bodies. www.jbs.cam.ac.uk/risk
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