Monthly Archives: February 2017

Keynote Speakers Announced for Exceedance 2017

With Exceedance 2017 coming March 20 to 23, RMS has announced an impressive line-up of keynote speakers ready to provide their insights, ideas and inspiration to help attendees jumpstart their planning and adoption of new RMS solutions and model updates.
The ten keynotes cover a wide range of topics, including:

  • The Future of Modeling Powered by the RMS(one)® Platform: With the modeling base expanding to encompass new classes, speakers reveal the latest science and industry-leading advances in tools and data analytics, that will deliver breakthroughs in operational efficiency and business agility.
  • Risk management innovations for cyber, liability, global accumulation and exposure, and more.
  • Creating resilience in the aftermath of Hurricane Katrina, and the efforts that were made to rebuild Louisiana and New Orleans.

Here are a few of the industry leaders participating as keynote speakers:

  • Dr. Robert T. Reville, president and CEO, Praedicat
  • Hjörtur Thráinsson, modeling expert at Munich Re
  • Jeffrey P. Hebert, deputy mayor of New Orleans and the city’s first chief resilience officer
  • Tanya Harris, community outreach manager, Make It Right Foundation
  • Hemant Shah, RMS co-founder and CEO
  • Leading RMS experts including Dr. Robert Muir Wood, Dr. Andrew Coburn, and others.

sessions-image-EAlong with these keynote speakers, this year’s Exceedance will see more than 20 guest speakers share their insights, with experts and opinion formers from across the industry.

Throughout Exceedance, there will be many opportunities for interaction with model experts, up-close team training, networking opportunities, and so much more. In The Lab over 50 RMS scientists and modelers will offer technical insights and training – and can meet clients one-to-one for personalized support.

 

Exceedance 2017 will be here in three weeks. Make your plans to join us!

With the upcoming releases of Risk Modeler on the RMS(one) platform and Version 17 in April, this is an important year for RMS and our clients. If you’re not already attending, register for Exceedance now and experience 22 tracks, 105 sessions, and engage with 250 RMS experts – it’s four days of support and enablement to maximize success for you and your team!

For complete information on the keynote speakers, tracks and sessions, and The Lab, visit the conference website: exceedance.rms.com. Look for our next blog with more exciting Exceedance updates in the coming weeks!

China Upgrades Support for Agriculture Insurance

Right be­fore the Chi­nese New Year, the Min­istry of Fi­nance (MoF) in China re­leased up­dated guid­ance regarding agri­cul­ture in­sur­ance for the country. It has in­creased the pre­mium sup­port to­wards cen­tral and west China, and high­lighted its com­mit­ment in sup­port­ing its ma­jor three crop types: rice, wheat, and corn.

The guidance, which has been in effect since the start of 2017, sees the cen­tral gov­ern­ment in China covering 40 percent of the crop in­sur­ance pre­mium in cen­tral and west provinces, while for the east area it re­mains at 35 percent. Within counties and districts defined by the MoF as of significant agri­cul­tural importance, coverage will be fur­ther increased up to 47.5%.

More gen­er­ous sup­port from cen­tral gov­ern­ment is meant to fur­ther relieve some of the fi­nan­cial pres­sures experienced by provin­cial, pre­fec­ture, and county-level gov­ern­ments, as the new pol­icy sets a 20 percent pre­mium to be cov­ered by the farmer as the pre­con­di­tion to benefit from the increased support.

With this be­ing in­tro­duced, we believe that two ma­jor changes could take place. The first is the uni­fied pre­mium rate at provin­cial level, which will take the im­pact— and we could then see a county level rate struc­ture emerge. Sec­ondly, the insurance pen­e­tra­tion rate for rice, wheat, and corn, which currently averages around 70 percent in av­er­age, will see a ro­bust in­crease.

Hurricane Risk on the U.S. East Coast: The Latest RMS Medium-Term Rate Forecast is More Than Just a Number

For the meteorologist in me, hurricane and climate research is fascinating in its dynamism. The last two years have seen continuous scientific debate about the state of Atlantic basin hurricane activity, which we’ve reflected on thoroughly in the RMS blog.

But for the insurance industry, it’s more than just a fascinating debate: business decisions depend on clear insight. It’s more than just a number.

In April with the release of the RMS Version 17 North Atlantic Hurricane Model, we will include the latest biennial update to the industry’s long-term rates, in addition to the RMS medium-term rate forecast.

For the first time since its introduction, the RMS medium-term rate forecast has dipped slightly below the long-term rate.

For the U.S. as a whole, the new 2017-2021 medium-term rate forecast MTRof hurricane landfall frequency is now one percent below the long-term rate for Category 1–5 storms, and six percent for major hurricanes (Category 3–5 storms).

Mind the Tail

The impact of the rate changes on the view of risk will vary from portfolio to portfolio. Measuring the new medium-term rate against the RMS Industry Exposure Database, we see a 16 percent decrease in the U.S. average annual loss (AAL) relative to the previous medium-term rate forecast – mainly driven by lower risk in Florida and the Gulf.

However, to focus solely on the headline AAL-based changes, or the national impacts, ignores the risk implications of the unique atmospheric conditions and key features of the new forecast.

At the 250-year return period, the decrease is more muted – at eight percent – which positions the medium-term rate slightly higher (one percent) than the long-term rate. Unlike with previous below-average periods, persisting warm sea surface temperatures in the Atlantic continue to indicate that the medium-term rate risk remains above the long-term rate in certain key U.S. regions, such as the Northeast.

The Science and Process Underpinning the Medium-Term Rates

Grounded in objective science, we follow a systematic process to develop the biennial medium-term rate each time we update it. We analyze 13 different statistical climate models, which all provide a five-year forecast of activity for the Atlantic basin.

The climate models reflect three main theories of hurricane variability in the Atlantic over recent decades:

  • Shift models identify historical, multi-decadal periods of high or low hurricane activity, which are viewed as natural, inevitable oscillations
  • Sea surface temperature (SST) models identify relationships between SSTs and hurricane landfalls in the past and use these to predict similar patterns in the future
  • Active baseline models suggest that the low activity phase of the 1970s and 1980s was caused not by natural variability, but by high levels of atmospheric aerosols which are not expected to recur in the future

To provide a more reliable forecast, we take a weighted average across all 13 models – based on tests made of each model’s predictive “skill.” These tests compare how well the models predict hurricane activity in sample periods from the past, against what occurred. This rigorous testing process is revisited with each release of the medium-term rate.

The Latest Data – How Do the Climate Models Interpret It?

The new medium-term rate forecast uses updated information from the HURDAT2 hurricane dataset and the latest sea surface temperature data, including the 2014 – 2016 seasons.

MTR2

North Atlantic Basin major hurricane counts, 1970-present

The updated hurricane data reveals a four-year stretch of below-average Atlantic major hurricane activity between 2012 and 2015, leading to a five-year average trend that is decreasing.

MTR3

North Atlantic Basin main development region sea surface temperatures, 1970-present

On the other hand, sea surface temperatures over this same period have been rising. Energy derived from warm temperatures serves as an important driver for hurricanes – so you would expect to see an increasing rate of hurricanes, not fewer.

When the data is fed into the climate models they do not point in the same direction for future hurricane activity.

The shift models used in our medium-term rate forecast focus on the decrease in major hurricanes and identify the seasons since 2011 as statistically distinct from acknowledged active periods observed since 1950. This could be significant because it may indicate a transition to a quieter phase of hurricane activity, as discussed in Nature Geosciences.

But while the shift models indicate this transition, both the sea surface temperature and active baseline models do not identify a similar transition to a less active hurricane phase, in part based on the warmer Atlantic sea surface temperatures.

It’s Not Just a Factor

As I discussed earlier, the medium-term rate considers multiple drivers of hurricane activity, including sea surface temperatures. Peer-reviewed research highlights the influence of sea surface temperatures (SSTs) on hurricane tracks; thus, analysis of projected SSTs provides different forecasts not only of where along the coastline hurricanes are likely to occur, but at what strength hurricanes will make landfall. This is a process that RMS terms regionalization.

During higher sea surface temperature periods, the body of warm water over which hurricanes develop expands eastward towards Africa. This expansion increases the likelihood that hurricanes re-curve away from the eastern U.S. coast, towards the northeast and maritime Canada, following paths similar to hurricanes Irene and Sandy.

In the medium-term rate forecast it is regionalization that causes forecasted activity in the U.S. northeast and mid-Atlantic to be above the long-term average, despite a below-average forecast for the U.S. as a whole. This creates a pattern that differs from normal climatological expectations, which would typically be focused on the risk to Texas and Florida – although, obviously, in those southern states the risk does remain higher in absolute terms.

The forecast’s regionalization also produces slightly above long-term risk beyond the 100-year return period, on the industry U.S. exceedance probability curve. At the 250-year return period, for example, while the new medium-term rate has decreased risk by eight percent, the new forecast remains one percent above the long-term rate. Despite decreases in the forecasted frequency of large loss-causing, tail events in Florida and the northeast U.S., warm Atlantic sea surface temperatures continue to support the possibility of these events occurring at a rate above the long-term average.

Delivering the Model

Pre-release data sets for the new medium-term rate are now available in advance of the April release of the updated RiskLink® Version 17 North Atlantic Hurricane Models. These are accompanied by technical documentation describing the process’ methodology and its impact on risk. It will also be concurrently available within Risk Modeler on the RMS(one)® platform.

For further insights from RMS experts on the new forecast, as well as on model updates and the latest on the RMS(one) solutions platform, join us at Exceedance in New Orleans, March 20-23.

Exceedance 2017 – Coming in Just a Few Weeks!

It’s hard to believe but Exceedance 2017 will be here in just a few weeks, and the excitement is building!

Exceedance_6Feb2Many companies are sending their cross-functional teams to fast track their ability to put new capabilities to work. And with good reason. With the releases of Risk Modeler on the RMS(one)® platform and Version 17 in April, attendees will experience more tracks (22) and more sessions (105) than in previous years.

There will also be many opportunities for interaction with model experts, up close team training, networking opportunities, and so much more. Enabling your success is the driving force behind Exceedance!

Here are some highlights of the topics we are preparing for you and your team:

  • Risk Modeler powered by RMS(one): You will obtain a deep understanding of the modeling and analytics that provide the core of the Risk Modeler workflow, including setting up analyses, creating structures and positions, and accessing models from multiple RiskLink® versions for key use cases such as change management, modeling reinsurance programs, and analyzing insurance portfolios.
  • Version 17 North America Earthquake: The changes to the North America Earthquake Models represent the latest view of risk across the U.S., Canada, and Mexico. We will provide the full scope of the update by delving into the model components, including our unique implementation of the latest source models from the USGS, directional loss changes by region and line of business, and detailed loss change exhibits.
  • Event Response: How did your business respond to Hurricane Matthew? Learn what we are doing to enhance RMS Event Response, including future offerings, making it work for your business, addressing the main challenges faced during a real-time event like Hurricane Matthew, and more.
  • U.S. Flood Model: Flood risk management is becoming an increasingly important peril to manage for the insurance industry in the U.S. We’ll provide the latest details on all model components, including the simulation-based model methodology, the innovative vulnerability components of the upcoming RMS U.S. Flood HD Model, and how best to capture opportunities in the evolving U.S. flood market.

The Lab at Exceedance: Solutions, Model Releases, and In-Depth Training with RMS ExpertsExceedance_6Feb

The Lab will be packed with our latest modeling and software releases, in addition to special areas dedicated to research from Horizons (RMS scientific publication) and resilience initiatives across the globe. Over 50 RMS scientists and modelers will be in The Lab to offer technical insights, training, and support – and will be available for personalized discussions.

There’s a Lot to Be Excited About

This is an important year for all of us in the industry, and RMS is ready to meet our commitments to you as we remain on track for a full schedule of delivery throughout 2017. If you’re attending, be sure to let your colleagues know about all Exceedance has to offer.

To see the full agenda with information about the tracks and sessions, The Lab, speakers, networking events, and more, visit the conference website at: exceedance.rms.com. You can also register for Exceedance here. Look for our next blog with more exciting Exceedance updates in the coming days!

How AgTech Trends are Overcoming the Food Production Shortage: It’s All About the Data

There are many ways in which food productivity gains can and are be­ing achieved, but none are proving more ef­fec­tive than the ap­pli­ca­tion of tech­nol­ogy. Agricultural Technology, commonly abbreviated to AgTech or AgriTech, are the terms used to de­scribe the de­ploy­ment of this tech­nol­ogy within the agri­cul­tural sec­tor.

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