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Earth Observation and Global Change

Earth Observation and Global Change. April 22, 2008 AMS Public Private Partnership Forum Frank Nutter Reinsurance Association of America. Catastrophic Losses: An Insurance Perspective. 2005 – $103 B 2004 – $ 45 B Of 20 most costly – 18 since 1990 1/3 of total insured risk is “cat” risk

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Earth Observation and Global Change

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  1. Earth Observation and Global Change April 22, 2008 AMS Public Private Partnership Forum Frank Nutter Reinsurance Association of America

  2. Catastrophic Losses: An Insurance Perspective • 2005 – $103 B • 2004 – $ 45 B • Of 20 most costly – 18 since 1990 • 1/3 of total insured risk is “cat” risk • NFIP • Black Swans?

  3. Attribution of Losses • Urbanization • Values at Risk • Population Shift • Weather / Climate

  4. Assessing Risk • RMS • AIR • EQE

  5. Hierarchy of Perils • US Hurricane • California Earthquake • European Wind • Japanese Earthquake • Japan Typhoon • Tornado/Hail • Floods • Storm Surge • Coastal Flooding • Inland Flooding • Tsunami • Fire Following Earthquake Peak Off Peak Secondary

  6. An Insurer’s “Cat” Strategy • Quantification of Risk • Pricing Risk • Hedging

  7. A Progressive (Re)insurer’s Strategy • Assess client climate exposure • Sell catastrophic reinsurance • Provide risk transfer products • Capital markets products • Weather derivatives • Investment in alternative energy • Carbon trading and guarantees • Footprint • Employee incentives

  8. Research Needs • Extend the historical record • Land fall probabilities with wind speed • Storm tracks • Correlations, if any, between regions • Extremes and outliers • Hurricane power/size • Sea level rise and storm surge • Potential for abrupt events

  9. www.reinsurance.org

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