15: RMS' Jin Shah & Jeff Waters, Jun 2020 - on hurricanes, risk models & analytics for ILS & reinsurance

With hurricane season now officially underway we spoke with Jin Shah, Director, Capital Markets & Resilience and Jeff Waters, Senior Product Manager both of catastrophe risk modelling specialist RMS.  RMS provides risk analytics, modelling and data services to the insurance, reinsurance and insurance-linked securities (ILS) industry, so with hurricane season upon us we discussed the outlook for the months ahead with Jin and Jeff.  The pair discussed the forecast outlook for the 2020 Atlantic hurricane season and the tools that RMS offers to help companies in the re/insurance and ILS market better understand their exposures.  Encouragingly, the ILS market is "making a real investment in the analytical processes and workflows that will result in an underwriting process that hopefully mitigates against surprise results," Jin Shah explained.  We discussed the potential impacts of the Covid-19 pandemic on catastrophe response and claims assessment, as well as how the pandemic lockdown and parking of assets has changed the exposure of the industry to a degree.  Waters highlighted that, "Our models do have a lot of flexibility for our users to conduct sensitivity tests and essentially generate their own view of risk for situations like this."  Shah discussed the RMS products that help ILS funds and insurance-linked investors to better understand the threats posed to their portfolios when a hurricane is heading for land.  "This year we're extending the insights and now we've got this notion of a conditional probability of attachment, based on a given level of industry loss," he told us.  This will help ILS investors analyse what specific storm impacts could mean for their catastrophe bond profiles, Shah further explained.  Shah also told us that RMS' tools can show revised probability of attachments for different ILS assets based on given industry loss scenarios.  RMS will also deliver its daily event selection as a risk profile through RMS' Miu platform, which will allow ILS fund managers to analyse their private transactions as well, not just cat bonds, so they can provide better insights to their investor customers.

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