Catastrophe Modeling Inland Marine Exposures - IMUA

Basic Cat Modeling MethodologyThe four box model approachHazard Value Distribution VulnerabilityInsuranceConditions• Deductibles• Covers• Shares• Exclusions• …Where, how oftenand how strong?Where, what andcharacteristics?What damagedegree?What is covered?Andy's rule: No naturalcatastrophe model is entirelyapplicable in more than 95% ofall business instances – sometypes of coverage even less so.Many believethat a model isapplicable100% of thetimeOthers are notso sureReallynow?Concern: If we depend too much on models then we may lose ourability to challenge models when we think that the models are wrongSlide 8