The risk of natural catastrophes is a major risk for a reinsurance company like CCR Re. Successfully assessing the uncertainty associated with the occurrence and impact of natural disasters is crucial to defining our risk appetite and implementing our ambitious and controlled underwriting strategy.
Assessing potential Nat Cat Losses
CCR Re’s process of assessing potential Nat Cat losses starts with the individual risk of each case and then aggregate all the individual risks to give both a comprehensive and detailed representation of the company’s risk.
CCR Re has equipped itself with the best catastrophe models and has a dedicated team of specialists to model and assess natural catastrophe risk. The team also analyses the impact of climate change on our portfolios.
All of CCR Re’s property and casualty business that involves Nat Cat risk (storms, floods, earthquakes, hail) is modelled to determine the distribution of potential
Nat Cat losses and to measure the business’ individual risk. The outcomes of the Cat models are coupled with historical losses to produce the most accurate assessment of risk.
Loss distributions are used to underwrite business and ensure that the premium is adequate at the time of underwriting.
From the company’s point of view, the overall distribution of potential Nat Cat losses is obtained by aggregating the individual risks whilst considering the effects of geographical diversification.
This global distribution is broken down into detailed and relevant indicators to monitor and manage Cat risk, to assess Nat Cat accumulations, to structure the P&C retrocession programme and to assess expected losses in the event of a major natural disaster.
“CCR RE IS EQUIPPED WITH THE BEST CATASTROPHE MODELS AND HAS A TEAM OF SPECIALISTS DEDICATED TO MODELLING AND ASSESSING THE RISKS ASSOCIATED WITH NATURAL DISASTERS”
Calculation and monitoring of Nat Cat accumulations
CCR Re measures its accumulations for each section of property and casualty cover it underwrites, taking into account exposed contractual limits and potential losses. Individual accumulations are aggregated by country-peril and monitored in real time to control and optimise our underwriting appetite.
In 2022, we will continue to improve our control of natural catastrophe risk by implementing a thorough management of our natural catastrophe exposures through the collection and exploitation of the insured values we cover, which will allow us to strengthen the control of our accumulations.
“THE VALUE CHAIN CREATED MAKES IT POSSIBLE TO UNDERSTAND THE CAT COMPONENT IN PRICING IN EACH UNDERWRITTEN CASE AND TO ASSESS IN REAL TIME THE SHAPE OF THE ENTITY’S GROSS AND NET CAT PROFILE.”
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👉 This article is a part of our 2021 Activity Report, which is avalaible here ⏬
Jérôme Isenbart is Chief Risk Officer and Chief Actuary at CCR Re. He can be contacted at: jisenbart@ccr-re.fr
