LONDON--(BUSINESS WIRE)--The Association of British Insurers (ABI) last week published guidelines around industry good practice for catastrophe modelling under Solvency II. The paper was a result of the first collaborative working party of its kind which included Willis Re, the reinsurance arm of Willis Group Holdings (NYSE: WSH), the global insurance broker.
Andrew Mitchell, Managing Director of Willis Analytics Catastrophe Management Services and Ben Chadwick, Executive Director and Lead Analyst for Willis Re’s Non-Marine Retrocession and London Market business unit, represented Willis Re on the task force.
Mitchell commented: “These guidelines appear to be the first instance of any financial services sector working collectively to understand how best to manage modelling processes and model methodologies. This is also the first time in the 20 years of cat modelling history that a definitive consensus approach has been established by its leading practitioners.”
The ABI, with the Financial Services Authority advising on policy, brought together experts from across the re/insurance industry to create the market task force which transformed nearly 500 pages of abstract legislation into a 68-page set of practical guidelines for the implementation of catastrophe modelling under Solvency II regulations. Although the guidelines have been produced with UK insurers in mind, the taskforce anticipates they will have a global influence on how regulators and markets approach the use of cat models.
In response to the publication of the ABI guidelines, Willis Re prepared a summary of what the report will mean for its clients.
It is possible that some will view the recommendations of the report as yet another regulatory burden, but Mitchell urges the industry to remember that the guidelines do not introduce anything additional.
“Through the framework of Solvency II and similar legislation, regulators worldwide are starting to scrutinise catastrophe modelling and models,” said Mitchell. “The task force and the guidelines have not added any extra requirements for modelling beyond what is already present in the Solvency II legislation; rather, these guidelines bring clarity and objectivity to what was abstract policy, and will assist our clients in the activities necessary to prepare for solvency submissions to regulators.”
David Simmons, Managing Director of the Willis Re Enterprise Risk Management practice, welcomed the ABI’s paper and commented on Willis’ position, saying: “Willis is well-positioned to help our clients meet the additional challenges of Solvency II regulation with the minimum of pain. Willis has a policy of positive engagement with regulators, through channels such as industry task forces and expert groups, making sure that our clients’ concerns are heard and, as far as practically possible, interests protected. We will continue to watch for our clients’ interests as this initiative gains currency throughout Europe and welcome the opportunity to contribute to the clarification of existing policy.”
About Willis Re
One of the world's leading reinsurance brokers, Willis Re is known for its world-class Analytics capabilities, which it combines with its Capital Markets and Reinsurance expertise in a seamless, integrated offering that helps clients increase the value of their businesses. Willis Re serves the risk management and risk transfer needs of a diverse, global client base that includes all of the world's top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. The broker's global team of experts offers services and advice that help clients make better reinsurance decisions, access worldwide capital markets and negotiate optimum terms. For more information, visit www.WillisRe.com.
About Willis
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world. Additional information on Willis may be found at www.willis.com.