Verisk’s Newbold: Cat losses are rising sharply, but new modelling innovations can help insurers manage risk

Catastrophe losses are rising sharply due to a myriad of factors, Rob Newbold, president of Verisk Extreme Event Solutions, has said.

According to Verisk’s latest report, the global modelled average annual loss from natural catastrophes has risen to $152 billion, but the insurance industry should be prepared for losses to comfortably exceed this number in any given year.

Speaking to The Insurer TV, Newbold explained that while climate change is a factor, it only accounts for around a 1% annual increase in catastrophe losses. Inflation, population growth and urban expansion have played a bigger role, collectively, with over half of the world’s population now living in areas exposed to climate-driven perils.

Catastrophe modelling, in Newbold's view, is “a currency for risk transfer" giving insurers, reinsurers and brokers a common language to continually re-evaluate risk. He noted how modelling has evolved from broad portfolio views to detailed, rooftop-level analytics, which can support more sustainable risk decisions.

He stressed that so-called secondary perils, such as severe thunderstorms, wildfires, winter storms and inland floods, now account for nearly two-thirds of global catastrophe losses.

In today's world, "it no longer makes sense to call them secondary", Newbold said.

Newbold stressed that while modelling does not provide “the answer" to managing these perils, it is a critical component that helps insurers build a sustainable view of risk.

Looking ahead, Newbold outlined Verisk’s significant investments in new technology, including the roll-out of its next-generation global financial modelling framework and the upcoming Synergy Studio platform.

Verisk’s acquisition of Nasdaq’s Risk Modelling for Catastrophes platform, now rebranded as the Verisk Model Exchange, has also created an open ecosystem that enables clients to access more than 100 different views of risk from multiple providers.

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