Leading global data analytics provide Verisk has announced the availability of climate change projections for its U.S. Hurricane and Caribbean Tropical Cyclone Models, which can assist in quantifying climate-related, extreme event losses and their potential evolution over the next few decades.
Climate change projections offer a probabilistic view of future risk in 2030, 2050, 2075, and 2100 for four Shared Socioeconomic Pathway (SSP) and Representative Concentration Pathway (RCP) scenarios. These projections can be used by insurance and reinsurance companies to investigate how future climate change may affect their entire distribution of modeled loss, including not only average annual losses (AALs), but also key return period metrics that inform underwriting and risk transfer strategies.
“As they respond to stakeholders and manage their businesses, insurers, reinsurers, corporations, and investors are all actively working to assess the impacts of climate change on their portfolios,” said Bill Churney, president of Verisk’s Extreme Event Solutions. “Our climate change solutions assist them in understanding the growing risks and rising losses associated with climate change’s physical damage and liability aspects, allowing them to thoughtfully prepare operational and strategic resilience initiatives that meet the needs of all stakeholders.”
Verisk climate scientists developed the projections after conducting a thorough review of the most recent international research and hurricane simulations based on nine different general circulation models (GCMs). This novel methodology combines GCM results with physics-based, high-resolution simulations to better represent how future hurricanes may form, intensify, and move.
Climate change projections can be used to estimate future losses in the residential, commercial/industrial, manufactured (mobile) home, and automobile industries. The outcomes have a wide range of applications, including:
- Responding to ESG reporting and regulatory climate disclosure requirements such as the Task Force on Climate-Related Financial Disclosures (TCFD) and other regulatory bodies around the world
- Portfolio stress testing and rebalancing
- Improving climate risk insights and streamlining stakeholder and investor reporting
- Gaining peril-specific knowledge that can be used to inform mitigation and adaptation strategies
“Catastrophe models have been created to simulate the financial consequences of extreme weather.” Verisk extreme event models are designed to reflect a near-present (0-10 year) view of climate risk by frequently updating catastrophe models and employing a probabilistic modeling approach,” said Dr. Peter Sousounis, vice president and director of climate change research, Verisk Extreme Event Solutions. “Our projections for the longer-term (10+ years) view of risk are based on a proprietary methodology in which we downscale the results of high-resolution GCMs.”
The projections are part of a suite of climate change and ESG solutions provided by Verisk for assessing climate risk and informing adaptation efforts in the insurance industry and the global economy. Verisk businesses provide robust data sets and tools for managing climate change risks and ESG concerns. Learn more about Verisk’s ESG and climate solutions.
About Verisk’s Extreme Event Solutions
Verisk (AIR Worldwide) offers risk modeling solutions to help individuals, businesses, and society become more resilient to extreme events. Verisk established the catastrophe modeling industry in 1987 and now models the risk of natural disasters, supply chain disruptions, terrorism, pandemics, and casualty catastrophes. Verisk’s advanced science, software, and consulting services are used by insurance, reinsurance, financial, corporate, and government clients for catastrophe risk management, insurance-linked securities, longevity modeling, site-specific engineering analyses, and agricultural risk management. Verisk’s extreme event solutions team is based in Boston, with offices throughout North America, Europe, and Asia. Please visit www.air-worldwide.com for more information. Visit www.verisk.com for more information on Verisk, a leading data analytics provider serving customers in insurance, energy and specialized markets, and financial services.