Willis Re, the reinsurance broking arm of Willis Towers Watson, has launched a new Hail Catastrophe Risk Model which quantifies the risk from damaging hail events across South Africa.
The model has been developed in collaboration with Willis Research Network partners at NASA’s Langley Research Centre and the Karlsruhe Institute of Technology (KIT) in Germany.
It features a comprehensive stochastic hail catalogue, developed by hail specialists at KIT using NASA satellite-derived data. Applying the latest NASA hail detection algorithms, KIT mapped the distribution of observed frequency and severity.
Events and their attributes were then simulated for a 25,000-year period to generate a comprehensive catalogue of hail events, with their footprints and parameter distributions reflecting observations in South Africa.
Natalie van de Coolwijk, Chief Executive Officer for Willis Re South Africa and Head of Middle East & Africa, Willis Re, said: “The updated hail model is an important addition to our toolkit and reaffirms our market leading position with respect to catastrophe modelling capabilities for the Middle East & Africa region.
“It will serve our clients in assessing their risk management needs for this prevalent peril and allow for a technical view in determining their risk appetite and mitigation measures.”
Marie-Kristina Thomson, head of catastrophe analytics for EMEA West-South at Willis Re, said: “We are excited to launch our new hail risk model, which will provide effective portfolio hail loss metrics enabling Willis Re clients to derive actionable insights.
“In collaboration with our Willis Research Network partners, we have developed a robust view of hail risk across our territories in Europe and now South Africa, underpinned by the latest available data and detection techniques, empowering our clients to make confident risk transfer decisions for hail-sensitive portfolios.”
Some of the main applications of the new model include: Pricing reinsurance contract layers for purchasing protection in the local and international reinsurance markets; Independent sense-check for assessing capital adequacy and responding to regulatory solvency requirements; and portfolio management and optimisation.
Willis Re explains how hail losses are a fairly frequent occurrence in South Africa, with seven of the top ten insured nat cat events since the 1970s in the country being associated with hail. Furthermore, over 45% of the total value of insured motor and property claims from nat cat perils are caused by hail damage, says the broker.
Kristopher Bedka, Research Scientist at NASA’s Langley Research Centre, commented: “The NASA Applied Science Disasters Program, the sponsor of this NASA collaboration with Willis Re, KIT and a variety of international partners, promotes the use of satellite observations to reduce risk and promote resilience from a variety of natural disasters including severe hailstorms on local and global scales.
“NASA satellite-derived products developed within this project are providing unique insights into severe storm climatologies over South Africa and other regions around the globe that have not been extensively observed by ground-based weather radar networks. We are excited to see that these data are providing significant contributions to risk assessment and development of this Catastrophe Model.”