Natural Catastrophes: Are Canadian Insurers Ready for “The Big One”?

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Collaborative Research Team Project: 2021-2024

Every year Canada, and the entire world, faces natural disasters such as winter storms, floods, and wildfires which occur with rising probabilities and magnitudes. Predicting the occurrence and severities of natural catastrophes is statistically a difficult task, however indispensable for insurance companies underwriting natural catastrophes. Recent years have seen tremendous improvements in statistical modelling for insurance risk management, both theoretical and computational. These advances may not all be reflected in solvency capital requirements – the capital insurance companies are required to hold by regulation. 

This project aims to advance the theory and application of risk assessment to insurable natural disasters. A particular focus lies in (a) understanding suitable risk measures for assessing risk inherent in natural catastrophes, (b) stress testing the resilience of the Canadian insurance market to natural disasters, and (c) providing an alternate potential approach for calculating solvency capital requirements for insurable natural catastrophes.

Team leaders:

Mélina Mailhot – Concordia University
Silvana Pesenti – University of Toronto

Collaborators:

Andrei Serykh – Office of the Superintendent of Financial Institutions
Claude La Rochelle – Autorité des Marchés Financiers
Marius Hofert – University of Waterloo
Shlomit Jacobson – Canadian Institute of Actuaries

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