Let's talk: Bridging the gap between science and insurance
Q. What is the role of an in-house scientist at an insurer and reinsurer?
My job is not simply academic: it’s about helping to foster understanding and the sharing of scientific information within the business.
Our role is to accumulate and assess relevant scientific data and research, in order to help underwriters define how much, and which science should be used in assessing, pricing and underwriting risk.
However, working as a scientist for a re/insurer, I can tell you that the languages of science and insurance are distinct and often highly technical. Fortunately, being in-house means we are able to play an important role in bridging the gap between these two worlds, so that we can progress ideas and thought leadership through to practical implementation.
Q. The insurance industry has traditionally used historical trend and long-term loss data as the basis on which to assess and price risk – does this work for hurricanes?
Tropical cyclones – particularly hurricanes – are often the drivers of the largest catastrophic, industry-wide losses for insurers and reinsurers in any given year. This has meant that hurricane risk has long been an important area of study.
Of course, analysis of trends and long-term losses plays an important role. We’re able to use science to identify changes in the background climate that are likely to affect this risk, which suggest that history alone may not be the best predictor of current and future risk.
As we gain greater understanding about these variables and their impact, we can find better ways to help prevent and manage hurricane risk, to help societies build up their resilience and, of course, to transfer financial elements of the risk.
Q. Is your team involved in any projects with Academia to help foster a greater understanding of hurricane risk?
I recently co-wrote a chapter in an academic book on hurricane risk with some colleagues from the catastrophe risk modelling community.
The chapter, “Issues of Importance to the (Re) Insurance Industry: A Timescale Perspective,” aims to give an introduction to how risk is priced by insurers and reinsurers, with a particular emphasis on hurricanes, and how the catastrophe modelling industry was borne out of limitations in more traditional ways of assessing and pricing risk.
By contributing the chapter in an academic book, we are aiming to demystify what insurers, reinsurers and cat modellers do, to give scientists and academics a better understanding of how the re/insurance industry thinks about and quantifies this type of risk. We hope it will help us all to better work together to develop new ways to model, underwrite and manage hurricane risk.
Q. Are you currently working on any other projects with the academic community?
I am part of the research team working with academics and computing experts from the Barcelona Supercomputing Center and Colorado State University on seasonal hurricane predictions. This project aims to centralise seasonal hurricane predictions made by specialists from around the world to try to increase the transparency, debate and understanding of differences in the forecasts.
As the work progresses, we hope that it goes beyond just making seasonal forecasts of basin-wide activity by giving more precise projections of where and when storms are likely to hit such that we can tailor the scientific prediction to be a prediction of societal risk.
I’m also leading another hurricane-focused project with academics from the University of Exeter, Imperial College London, the London School of Economics and the University of Reading. We are using past hurricane forecasts from weather forecast models that we hope will allow us to build up a more complete picture of present day risk.