EVENT-DRIVEN NATURAL CATASTROPHE MODELING AND MODEL REFINEMENT FOR INSURANCE AND RISK MANAGEMENT
A system and method for event-based modeling and model refinement for natural catastrophe related risks, including but not limited to fires, floods, earthquakes, and hurricanes/tornados. The system and method feature simultaneous simulation of a plurality of industry models using a variety of risk information, including but not limited to real-time data, recent and historical event data, hypothetical data, and crowd-sourced data. The system and method use a variety of data sources in conjunction with machine learning to continuously and in real-time update and tune the simulated models performance and sensitivity to provide useful risk assessment and risk management data. Based on these model assessments, the system can produce notifications that can be made to enable automated and human actions.
1 . A system for real-time event based modeling and continuous model refinement of natural-catastrophe related risk for underwriting and risk management, comprising:
a computing device comprising a memory, a processor, and a non-volatile data storage device;
a data manager comprising a first plurality of programming instructions stored in the memory and operating on the processor, wherein the first plurality of programming instructions, when operating on the processor, cause the computing device to:
receive event data related to an insured asset, the insured asset comprising a characteristic;
retrieve an insurance policy which provides insurance coverage for the insured asset, the insurance policy comprising a contract term; and
forward the event data and the insurance policy to a dynamic modeler;
a dynamic modeler comprising a second plurality of programming instructions stored in the memory and operating on the processor, wherein the second plurality of programming instructions, when operating on the processor, cause the computing device to:
receive the event data and the insurance policy;
retrieve an insurance risk model comprising a model of insurance risk related to a natural catastrophe event;
run a plurality of analyses of the projected cost of insuring the asset under the insurance policy based on the event data, each analysis comprising an iteration of the insurance risk model over at least one change to each of the following:
the characteristic of the insured asset; and
the contract term of the insurance policy;
determine a probable cost insuring the insured asset under the insurance policy based on the event data if no changes are made to the characteristic or the contract term; and
determine a reduced cost of insuring the insured asset under the insurance policy based on either a change to the characteristic or a change to the contract term; and
recommend either a change to the characteristic or a change to the contract term based on the determined reduced cost.
2 . The system of claim 1 , further comprising a sensitivity analyzer comprising a third plurality of programming instructions stored in the memory and operating on the processor, wherein the third plurality of programming instructions, when operating on the processor, cause the computing device to:
quantify the uncertainty in the projected cost due to changes to either the characteristic or the contract term; and
determine how much each such change contributes to the uncertainty.
3 . The system of claim 1 , wherein the analyses of the projected cost comprise analysis of a plurality of characteristics of the asset or a plurality of contract terms of the insurance policy.
4 . A method for real-time event based modeling and continuous model refinement of natural-catastrophe related risk for underwriting and risk management, comprising the steps of:
receiving event data related to an insured asset, the insured asset comprising a characteristic;
retrieving an insurance policy which provides insurance coverage for the insured asset, the insurance policy comprising a contract term;
retrieving an insurance risk model comprising a model of insurance risk related to a natural catastrophe event;
running a plurality of analyses of the projected cost of insuring the asset under the insurance policy based on the event data, each analysis comprising an iteration of the insurance risk model over at least one change to each of the following:
the characteristic of the insured asset; and
the contract term of the insurance policy;
determining a probable cost insuring the insured asset under the insurance policy based on the event data if no changes are made to the characteristic or the contract term;
determining a reduced cost of insuring the insured asset under the insurance policy based on either a change to the characteristic or a change to the contract term; and
recommending either a change to the characteristic or a change to the contract term based on the determined reduced cost.
5 . The method of claim 4 , further comprising the steps of:
quantifying the uncertainty in the projected cost due to changes to either the characteristic or the contract term; and
determining how much each such change contributes to the uncertainty.
6 . The method of claim 4 , wherein the analyses of the projected cost comprise analysis of a plurality of characteristics of the asset or a plurality of contract terms of the insurance policy.