The WTW Research Network has disclosed its latest partnership with the London Mathematical Laboratory, aiming to enhance decision-making in the insurance industry through advanced catastrophe modelling.
The collaboration is anchored by the expertise of Professor Erica Thompson, a renowned figure in applying mathematical models to practical decision-making scenarios.
Thompson's work revolves around deconstructing the construction and application of models, with a focus on refining their reliability and effectiveness. This partnership with WTW leverages her pioneering research to improve natural catastrophe models, which play a critical role in the insurance sector's assessment of climate-related risks.
WTW notes that her contribution is deemed vital for assisting the broker’s clientele in navigating the complex terrain of catastrophe modelling amidst an evolving risk environment.
Highlighting a distinctive approach, Thompson delves into the pressures influencing model development from technical, commercial, and regulatory standpoints. This exploration into the intricacies of model creation and calibration offers fresh insights into the processes behind the development of models that guide strategic business decisions.
Cameron Rye, head of modelling research and innovation at WTW Research Network, expressed the importance of catastrophe models in the insurance industry, which have been instrumental in shaping insurance pricing and risk management strategies for three decades.
“When there is a gap between what models tell us and what we observe in the real-world, it often prompts criticism of the models. But if we focus on how models are built and evaluated, could this lead to better decision-making?” Rye said. “Professor Thompson’s research will help catastrophe and climate modelers at WTW better understand the strengths and limits of our modelling tools, and ultimately allow us to give better advice to our clients.”
Thompson also stressed the significance of model evaluation for both creators and users, pointing out that the true measure of a model's value lies in its ability to facilitate informed decisions.
“I’m excited about working with WTW to look at how to understand the quality and usefulness of models used for insurance decision-making and how to ensure that we get the most out of these advanced tools,” Thompson said.
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