A number of re/insurers are moving away from a multi-model, blended approach to understanding risk and returning to a single model approach complemented by their own models and assumptions.
That is the view of Andrew Hitchcox, chief risk officer at Kiln, opining on the issue of models at RMS (one)’s launch event in London. He said that this was being driven by a need to “own your own risk”.
Hitchcox said that re/insurers need to investigate and challenge models, particularly as they take on new risks, arguing that an in-depth understanding of model capabilities is not possible across multiple platforms.
Philip Hobbs, syndicate actuary at Liberty Syndicates said that his firm was taking a similar stance. He said that sharp changes in model assumptions such as occurred under RMS 11 had “forced us to reject some of the models and take a more concentrated approach”.
Not all the panellists agreed that a single model approach was best however. Stephen Postlewhite, group chief risk officer at Aspen, said that the company continues to “pursue multiple views of risk”, while platforms such as RMS (one)—which is ‘open source’—are likely to encourage greater collaboration between modelling firms in understanding risk.
Kiln, Aspen, Liberty Syndicates, RMS, cat models