‘think’ thought leadership series

The ‘think’ series aims to promote debate on topics across the spectrum of actuarial work and beyond. It looks to provide a platform for members and stakeholders to share views that may differ from the IFoA’s ‘house’ view.

Through this, we hope to challenge the status quo within the profession, question orthodoxy, and shine a light on complex or under-examined issues. At its heart, the series is about stimulating discussion and dialogue to help tackle issues from a different perspective.

Edition 19: When precision undermines pooling: rethinking insurability in an age of advanced risk modelling

The nineteenth edition of our ‘think’ series has been authored by David McNamara, Head of Catastrophe and Climate Analytics at FloodRe. 

'When precision undermines pooling’ explores how advances in catastrophe risk modelling and flood mapping are changing the insurance industry's approach to risk. 

The paper argues that while increasingly sophisticated models have improved our understanding of risk, they can also widen protection gaps by making it easier to identify properties perceived as uninsurable. It examines how risk perception, climate change and model uncertainty influence the affordability and availability of insurance. 

Read the full piece to discover why uncertainty remains a fundamental part of insurability and why greater scrutiny of risk models is essential to preserving effective risk sharing in the future.