Best catastrophe modelling software: Aon Benfield

Insurance Risk Awards 2015: An open approach to the complex discipline of catastrophe modelling has paid off for Aon Benfield

Established 20 years ago as an in-house resource for its reinsurance broking business, Aon Benfield’s Impact Forecasting catastrophe model development centre began selling its models and the Elements loss calculation platform three years ago. The industry quickly realised that the company not only had some unique models, but also a modelling philosophy that was innovative and chimed with evolving attitudes towards more open and collaborative catastrophe modelling.

From the start, Impact Forecasting focused on the development of models for perils and territories where the major commercial modelling companies had not yet ventured, or where existing models lacked credibility. By partnering with clients and using their loss data, the company has been able to achieve results more reflective of clients’ experience. Among the areas where it has produced models where few existed before are central and eastern Europe, US, Canada and Asia floods, and US and UK terrorism.

Beyond the coverage of the perils, what has caught the attention of many insurers is the transparency of Impact Forecasting’s models. “The major challenge with catastrophe modelling is being able to understand what is happening inside the complex models and being able to influence the process. For this reason, we have made our platform open and transparent so users can see all the assumptions that are made in the models and can change them to align more closely with their own data and view of risk if they so wish,” says Adam Podlaha, global head of Impact Forecasting at Aon Benfield, who is based in London.

In a further step towards openness, Impact Forecasting has recently added support for the format developed by the Oasis open architecture loss-modelling consortium, enabling developers using the Oasis format to deploy their models in a full production environment. “We are committed to exploring ways to make the most of catastrophe models by working together as an industry. The open and customisable Elements platform helps to mitigate the need for insurers to install and learn new systems when looking to implement new models. We are pleased we can play a part in this trend for greater collaboration,” Podlaha says.

In parallel, Impact Forecasting has begun to make the models of third-party developers available on its platform. The first of these is an Australian flood model developed by Ambiental, which is based in Brighton, England. Justin Butler, founder and chief executive of Ambiental, said his company chose Elements as it offered “a highly customisable, easy-to-use, open and transparent platform that will help users get up-and-running quickly”.

The Impact Forecasting group has around 90 experts spread across research and development centres in Bangalore, Chicago, London, Prague and Singapore. So far, more than 15 clients use its models and the Elements platform, including a number of major players, with the client base continuing to grow rapidly, says Podlaha. RenaissanceRe uses the group’s European wind models and MS Frontier uses its central and eastern European flood models. Scor co-developed a French flood scenario model with Impact Forecasting. And AIG uses Elements as a platform on which to run its own models.

The major challenge with catastrophe modelling is being able to understand what is happening inside the complex models