Anticipating Rare Events of Major Significance Proceedings of a Workshop (2022) / Chapter Skim
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6 Fireside Chat - Rare Events and Insurance
6 Fireside Chat - Rare Events and Insurance
Pages 20-22
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From page 20... ...
Both specialty insurance and reinsurance deal with rare events and risks for which there is little or no historical data. Wucker commented that Gesmann's work involves the predictions insurers have to make, such as the probability that a certain event will occur and what its impact might be, or even what the effect will be on the particular companies that a client firm insures versus all insured in the same market.
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From page 21... ...
With hurricanes, the industry is constantly recalculating risks following each near miss using updated data on storm tracks. The auto insurance industry is benefiting in this regard by the increased use of telemetrics, the devices and apps that record a driver's behavior and can provide data about near misses.
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From page 22... ...
Gesmann pointed out that over the past 20 years, the insurance industry had significantly changed the way it assesses risk and uses probabilistic programming, in part because of the dramatic advances in computational power that has occurred during that time. In addition, modeling has evolved from a simplistic approach to a risk-based approach, by which he meant that insurers had to build models to assess risks from a 1 in 200 scenario, and by incorporating Bayesian analysis using probabilistic programming languages such as Stan or PyMC.
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