Scientists at Atmospheric and Environmental Research (“AER”), a Verisk Analytics company, have begun a new emerging risk research program entitled “Climate Change: Tornado and Hail” to quantify any shifts in the patterns of hazard related to severe thunderstorms in North America. The initiative is co-sponsored by a group of insurance industry and financial sector companies.
The AER research study will focus primarily on tornadoes and hailstorms, which are of high interest to commercial lines and personal lines insurers in both the U.S. and Canada.
“Despite the considerable efforts and resources applied by the insurance industry toward fundamental research into emerging risks, there has been and will always be significant gaps between the scientific community and the insurance industry,” said John Seo, Ph.D., co-founder and managing principal of Fermat Capital Management. “AER has the technical expertise, the industry knowledge and, just as important, the operating model to close such gaps. Our particular motivation for participating in AER's Emerging Risk research program is to enable us to identify new risk transfer opportunities and expand the insurance-linked securities market beyond conventional risks in a responsible way.”
“Roof-related claims have been a focal point for personal lines insurers during the past five years,” said Benjamin Rhodes, vice president of personal lines product management at The Hanover Insurance Group. “The new data resources that AER will be creating will improve our understanding of how changes in weather patterns, population growth, and construction characteristics can impact risk.”
“Hail risk is of critical concern to the Canadian insurance market,” said Jean Roy, vice president of rating and classification at TD Insurance. “AER's plan for original research in Canada, inclusive of cloud seeding influences, will inform how our insurance products need to evolve in hail-exposed parts of the country.”
“Commercial and personal lines insurers and associated industries need better quantification of the changing landscape of tornado, wind, and hail risk,” said Julie Rochman, president and chief executive officer of the Insurance Institute for Business & Home Safety (“IBHS”). “IBHS's mission is to conduct objective, scientific research to promote effective actions that strengthen businesses and homes against severe storms, and AER's research reinforces that objective by helping us understand the new normal, why these numbers are shifting and where they are trending.”
“AER's research into the question of whether a changing climate is influencing severe thunderstorm risk is a welcome endeavor,” said Jayanta Guin, Ph.D., senior vice president at catastrophe modeling firm AIR Worldwide, a Verisk Analytics company. “I'm confident that the program's findings will inform future generations of our U.S. and Canada severe thunderstorm models.”
“The supporters of the AER Emerging Risk research program share our strong belief that objective scientific research, when put specifically in the context of industry needs, can directly enhance business strategies,” said Kyle Beatty, senior vice president at AER. “Our focus on providing actionable data to our supporters on an ongoing basis, built off the foundation of original, peerreviewed research, is what makes this program uniquely valuable.”
“Through Verisk's work with the North American insurance market, we have observed weather claim activity from a unique position, which has inspired us to dive into the related science at a rigorous level,” said Mark V. Anquillare, executive vice president and chief financial officer at Verisk Analytics. “The data and resulting insights gained from this research will shape the way product managers and actuaries measure and manage the risk from these hazards.”
The Climate Change: Tornado and Hail research program is the second project in the Emerging Risk research program managed by AER for the insurance industry. The first research initiative, which was summarized in a report published by Lloyd's of London and co-authored by AER scientists, assessed the risk of covered loss due to widespread, long-duration power outages and resulted in a catalog of space weather blackout scenarios for the United States.
Learn more: www.aer.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].