Convective storm losses spur NSF-backed risk mitigation efforts

Convective storm losses spur NSF-backed risk mitigation efforts | Insurance Business Asia

Reinsurance

Convective storm losses spur NSF-backed risk mitigation efforts

Reinsurance specialist’s chief scientist to lead the advisory board

Reinsurance

By
Kenneth Araullo

The National Science Foundation (NSF) and the National Oceanic Atmospheric Administration (NOAA) are backing an initiative aimed at addressing the growing risks from severe convective storms.

Severe thunderstorms, including damaging winds, tornadoes, hail, and torrential rain, resulted in $42 billion in insured losses globally during the first half of 2024, according to Swiss Re Institute.

In the US, insured losses from severe convective storms have risen by approximately 8% annually since 2008. These storms have created various challenges, including extensive property damage, loss of life, community disruptions, increased taxpayer burdens, and rising insurance premiums driven by the surge in claims.

In response to these challenges, the National Science Foundation (NSF) and the National Oceanic Atmospheric Administration (NOAA) are backing an initiative aimed at addressing the growing risks from severe convective storms. The Cooperative Center for Interdisciplinary Research on Convective Storms (the Center) is a joint project led by Northern Illinois University and the University of Wisconsin-Madison, alongside key industry players.

The initial meeting, held on Sept. 12-13, brought together more than 70 stakeholders, including representatives from major insurers worldwide.

The center’s goal is to study the multifaceted impacts of convective storms on society and the economy. It will focus on several key areas: conducting research into meteorological, climatic, socioeconomic, and environmental aspects of these storms; developing advanced risk assessment methodologies; and working closely with industry partners, governments, and local communities to craft actionable strategies that enhance preparedness and recovery capabilities.

Additionally, the center aims to promote technological innovation, leveraging new tools such as advanced modeling, data analytics, and remote sensing to create more accurate forecasts and climate projections.

Stephen Bennett (pictured above), chief scientist at Demex, a risk analytics firm that offers reinsurance solutions for severe convective storms, has been appointed to lead the Center’s Industry Advisory Board.

Bennett, a noted weather and climate scientist, has played a central role in creating parametric reinsurance solutions designed to help insurers manage the growing risks associated with severe convective storms.

Last week, Demex also announced the formation of a new advisory board composed of industry veterans John DeMartini, Alastair Speare-Cole, and Matthias Weber. The advisory board will provide strategic guidance to support Demex’s continued expansion following the company’s recent $10.25 million capital raise.

“I’m excited to build an advisory board that will bring deep expertise and credibility to this critical, yet undervalued peril. Severe convective storms present a major challenge for many insurers and have serious consequences for homeowners. This highlights the urgency and importance of the center’s mission – and is the area Demex and I have focused on researching for several years,” Bennett said.

Bennett added that severe convective storms remain a major challenge for many insurers and have significant consequences for homeowners. With the new advisory board in place, Demex is positioned to strengthen its role in developing strategies that mitigate the impact of these events on insurers and their clients.

The center’s director, Dr Victor Gensini, emphasized the economic importance of addressing severe convective storms, noting that since 1980, more than 360 distinct billion-dollar weather and climate-related disasters have occurred, with more than half resulting from severe convective storms.

“The increase of these events in recent decades has had a significant economic impact and has pushed severe convective storms to the forefront of concern in the insurance industry,” Gensini said.

On Bennett’s leadership of the advisory board, Gensini remarked that Bennett’s expertise in understanding the economic implications of weather, along with Demex’s pioneering work in reinsurance solutions, positions him to provide valuable insights to the center’s efforts.

“Average annual losses from convective storms have risen by about 8% per year since 2008, with losses surpassing $40 billion in the first half of 2024 alone. As secondary perils continue to reshape the insurance landscape, it’s clear that stakeholders must prioritize strategies for research, preparedness, and loss mitigation,” Bennett said.

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