Modelling Vulnerability

Understanding and modelling the vulnerability of different assets to NatCat risk remains an important challenge. Comprehensive NatCat assessments require detailed understanding of both insured and uninsured assets (including infrastructure and public assets). This requires not only data covering various important characteristics of each asset (construction type, size, age, etc.), but also the use of models to simulate the damages depending on the vulnerability of the asset and the severity of the NatCat event. Sufficient historical data is often key for the appropriate calibration of such models.

However, barriers for sharing of such data (e.g., insurance claims data), as well as lack of data itself, especially in Emerging Markets and Developing Economies (EMDEs), often constrain the ability to improve vulnerability modelling. Accurate evaluations of risk prevention measures will improve the reliability of such assessments. In particular, detailed data about existing adaptation measures, such as flood walls, and their effectiveness is critical. Also, it is important to consider the effectiveness of the existing infrastructure, which depends on its regular maintenance.

Finally, addressing insurance protection gaps requires assessing the vulnerability of the population due to loss of livelihood, death, injury, or sickness in the wake of natural catastrophes. Such loss of resilience can put additional strain on fragile social protection mechanisms.

Supervisors can play varied roles with respect to NatCat models. Many supervisors rely solely on the NatCat models used by their regulated institutions and thus do not have a lens across the entire industry. In contrast, other authorities have taken steps including engaging modelling firms directly to assess the exposure to a specific NatCat risk.