A stochastic step forward

Non-life companies are embracing the use of stochastic modelling and rethinking their approaches to risk transfer. Clive Davidson reports

While life companies have been forging ahead with their stochastic modelling of assets and liabilities, non-life companies have generally been assumed to be lagging behind. But this is a simplistic view. Many non-life companies have adopted stochastic approaches with enthusiasm, and in some areas, particularly catastrophe risk, they have been using stochastic models for many years. Meanwhile, the companies face a whole other catalogue of risks compared with their life counterparts, the duration