“Catastrophe Modeling” (or “CatModeling”) is a science born in the insurance sector to indicate a rigorous probabilistic approach to study natural disasters and their consequences. When insuring against rare events, it is not possible to base premiums on statistics of historical claims, which is how traditional actuarial science operates. Instead, accurate physics-based and mechanistic models integrate the limited available data, while accounting for the uncertainties. Recent trends see CatModeling applied beyond natural disasters, to infrequent events like epidemics, financial crises, and political unrest. The insurance sector plays two crucial roles to support our communities.
Before disasters occur, it facilitates risk communication, providing immediate monetary value to retrofit and mitigation interventions, in the form of lower premiums or access to more policies.
After disasters it is responsible for a growing share of the financial resources that fuel recovery.
The sector is experiencing strong growth, and our graduate students with competence in this field are aggressively pursued by the industry. Our team has worked on this topic since 2015, focusing on natural disasters and epidemics, and established a “Catastrophe Modeling Coordination Network” in 2021.