Issues of Importance to the (Re)insurance Industry: A Timescale Perspective

Abstract

Of any single weather or climate peril, tropical cyclones constitute the largest annual average loss to the global insurance and reinsurance industry, and in any given year are often the drivers of the largest catastrophic losses to the entire industry. These losses come in the form of payments covering insurance claims, initiated through damage caused by a tropical cyclone’s physical effects. They are thus looked upon within the industry as hugely important perils for study and analysis. This chapter provides an introduction to traditional methods for pricing risk, with an emphasis on hurricanes, and how the catastrophe modeling industry has arisen out of limitations with those traditional methods specifically when looking at extreme, relatively rarely occurring perils that have the potential to cause catastrophic loss.