Property Catastrophe modeling has dominated the industry’s attention as climate change and severe weather events continue to challenge property insurers.
Liability Catastrophes, such as Asbestos, PFAS, and the Opioids Crisis, pose a similar threat to P&C insurers, but have not traditionally received the same level of scrutiny or modeling sophistication from actuaries and insurance professionals. We will introduce the foundational principles of liability catastrophe modeling and discuss how liability catastrophe events can be parameterized and calibrated for use in modeling. We will also discuss how the modeling framework and outputs can provide various risk metrics to support key use cases for actuaries to begin managing catastrophic liability exposure.
A foundational knowledge in catastrophe and stochastic modeling is recommended.
Learning Objectives:
Define the characteristics of a Liability Catastrophe Event.
Describe how to parameterize a Liability Catastrophe Event.
Describe a basic Liability Catastrophe Modeling approach.
