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Tuesday, October 18, 2011

Lloyd's of London - the importance of disaster modelling

Lloyd's have released a news item about the importance of computer modelling in managing the risk associated with insuring property and life. The article, Disaster models make waves, is here.

There is an interesting paragraph that mentions earthquake risk in New Zealand:
The evolution of the science means that catastrophe modelling now extends beyond the boundaries of well-known danger areas, such as New Zealand (earthquakes) and Florida (hurricanes), to cover most parts of the world and the different perils associated with them.
If New Zealand is within "the boundaries of well-known danger areas" one wonders why the insurance industry is making such a fuss about the scale of the costs, and why re-insurance has become such a drama of uncertainty. 
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