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Conduit Re warns of 'radical recalibration' of catastrophe models
Cedants have been warned to expect a dramatic adjustment in the modelling of excess-of-loss covers at the forthcoming renewals.
In an interview with Insurance Day, senior executives at Conduit Re said the rising cost of catastrophe losses is forcing reinsurers to reassess how they use
models in their risk analysis. “We are seeing a number of changes coming through. Even as we speak, pricing models are being
adjusted in the marketplace,” Trevor Carvey, Conduit Re’s chief executive and chief underwriting officer, said. “The main
challenge for the market, which is coming to terms with climate change and the increased frequency and severity of natural
catastrophe events, is to radically recalibrate its reliance on the models,” he added. This is particularly the case with
excess-of-loss business where data and level of information on the underlying policies being covered is often not as granular,
Carvey said.