In an interview with The Insurer, QOMPLX CEO Jason Crabtree discusses the need for the insurance industry to embrace new ways of modeling exposure in the article: Synthetic Data Key to new Hurricane Andrew-Style Modeling Revolution.
In the article, Crabtree notes that the insurance industry is experiencing another "Hurricane Andrew moment” - a reference to the devastating 1992 Category 5 hurricane that devastated south Florida and forced 11 insurers into bankruptcy, exposing flaws in insurers' risk modeling.
The new "Category 5 storms" are poorly understood risks like cyber security and contingent business interruption, Crabtree notes. As carriers look to embrace new modeling tools and techniques to stay on top of these emerging perils, they need to follow a similar approach to that used by the banking industry for years: using historic top-down, empirical models and then running a generative bottom-up model at the same time, notably via techniques such as agent-based modeling.
“The only way that you’re going to thrive and not just survive in that environment is to have a much more dynamic and continuous, forward-looking simulation-based exploration of what might happen,” Crabtree stated. The article is located here.
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