RMS to introduce new climate change models

RMS to introduce new climate change models | Insurance Business Canada

RMS to introduce new climate change models

Catastrophe risk solutions company RMS has announced the forthcoming launch of a new suite of climate-change models to help customers assess the near- and long-term impacts of climate change on physical assets and their businesses.

“Today there are no robust or consistent frameworks that can quantify the physical risks posed by catastrophes in a changing climate at the depth required,” said RMS CEO Karen White. “The innovative suite of RMS climate-change models changes that, giving the market a powerful new set of tools.

“With increasing board-level attention, stakeholder scrutiny and regulatory pressure, businesses need to operationalize climate-change analytics to make better decisions and enable better transparency. It is clear that the financial impacts of climate change are not solely a ‘future problem.’ The increasing incidence of wildfires, floods and hurricanes mean that climate change insights need to be incorporated into financial decisions that are made today, in parallel with long-term strategic planning and meeting increasing regulatory, environmental, social and governance (ESG) and TCFD reporting requirements and investor and customer demands. This necessitates a climate-change framework and models fully consistent with today’s catastrophe risk analytics and one which addresses the challenges posed by physical climate-change risk and its broad impact across all relevant time scales – from today through to the end of the century.”

The new RMS climate change models take the company’s existing capabilities further with forward-looking predictive insights and analysis. They utilize the best climate science consensus, including from the Intergovernmental Panel on Climate Change.

The new models will generally be available in June for RMS’s major peril models – North Atlantic Hurricane, Europe Inland Flood and Europe Windstorm. Further models and geographies will follow the initial launch. RMS’s climate-change services also include specialist advisory and consulting expertise and regulatory, ESG and TCFD support.

The models address the perils most impacted by climate change and feature:

  • Probabilistic modelling to capture events across different climate change scenarios
  • The ability to adjust time horizons and representative concentration pathways
  • A proprietary industry and economic exposure database
  • Embeddable software that integrates into existing workflows
  • Consulting and additional expertise to support regulatory submissions and activities

“The insights on climate risk provided by RMS have enabled us to better understand climate-related risks and opportunities for our business, to report those insights to financial stakeholders, and to develop and test strategy for our business,” said Eric Letourneau, senior vice president and group head of CAT accumulation management at QBE. “We can embed these analytics in our business processes, confident that we have consistency with how we measure underwriting risk and capital requirements now and in the future.”