This year, 2017, marks the 30th anniversary of the beginning of catastrophe modeling.
Executive SummaryCatastrophe models of the future will focus extreme events, including slow-to-develop ones like climate changes, writes AIR Worldwide CEO Bill Churney. Here, he looks back at the history of cat model development and forward to future possibilities.
Back in 1987, after a few quiet decades of natural catastrophes in the United States, the idea of business-shuttering losses seemed like a remote possibility to most in the insurance industry, and the need for catastrophe modeling was met with skepticism. Just five years later however, Hurricane Andrew jolted the insurance industry to its core. For companies managing risk based on historical experience, Andrew’s insured loss tally of more than $15 billion had previously been simply unimaginable.