General Insurance Spring Conference 2024: Claims modelling with climate data

Thu 25 Apr 2024 -
09:30 - 10:30

General insurance pricing often involves the use of statistical techniques to estimate the expected claims cost associated with a relevant risk profile. These techniques include GLMs and policyholder specific rating factors.

In recent years, the insurance industry has been increasingly impacted by weather-related events, which are harder to price for. These events are expected to be exacerbated by both climate change and meteorological phenomena such as El Niño.

Consideration of these risks has traditionally been captured in the pricing process indirectly using geographical features such as area codes. hi these may not directly capture the risks that need to be modelled.

This talk:

  • provides a framework for thinking about modelling climate-related risks, then deep-dives into how the pricing process can be improved
  • directly links an exposure dataset of buildings risk and associated claims experience to a high-resolution gridded precipitation dataset to investigate the predictive power of this feature on both an actual and forecasted basis
  • establishes a modelling framework that allows for the estimation of both the frequency and severity of buildings claims given the combined dataset
  • considers the relative importance of the added precipitation feature against traditionally used rating factors and the sensitivity of the underlying claims frequency and severity to changes in precipitation

Finally, by considering different precipitation scenarios, we show how the risks of excessive precipitation can be quantified, allowing for more accurate forecasts of financial performance to be made, and risk mitigation strategies to be investigated.

Featured Speakers

Chief Actuary at Old Mutual Insure

Ron Richman is Chief Actuary at Old Mutual Insure, where he is responsible for oversight of all actuarial activities in the OMI Group. Ron is a Fellow of the IFoA and the Actuarial Society of South Africa. He holds practicing certificates in short term insurance and life insurance from ASSA. Ron also has a Masters of Philosophy in Actuarial Science, with distinction, from the University of Cape Town.

He chairs the Actuarial Society of South Africa’s climate change committee and is the vice chair of the ASTIN board. Ron has a keen professional interest in the application of AI techniques to actuarial work and has published several papers demonstrating how this can be done.

Kovlin Perumal is a Fellow Actuary with the Actuarial Society of South Africa. Kovlin is a specialist in the subject of general insurance technical pricing and has a keen interest in applying data science techniques to enhance traditional actuarial methodologies.

Pricing and booking information

Members Book for free
Non-members £45