Pan-European earthquake risk modelling – leveraging the latest science in catastrophe modelling and implications for (re)insurance decision-making

Catastrophe models are fundamental tools in the quantification of risk for the (re)insurance industry. When it comes to European earthquake risk modelling, the most widely used vendor models available in the industry have not been updated since 2011 and are largely out of date with respect to the latest scientific findings and data from the recently released pan-European earthquake hazard (ESHM20) and risk (ESRM20) models (e.g. Danciu et al., 2021, Crowley et al., 2021). This presentation aims to showcase our work to incorporate the latest pan-European hazard and risk research within the catastrophe modelling framework, using a largely consistent methodology across the continent. We will focus on the type of datasets that have been leveraged across hazard, exposure and vulnerability and present how these have been utilized for the validation of each component of the catastrophe model, from hazard to vulnerability and loss. We will subsequently demonstrate how we have adjusted the existing catastrophe models, as well as the challenges faced. Finally, we will then proceed to highlight the impact of incorporating such pan-European studies in our View of Risk for loss modelling across 12 different countries in Europe and what are the implications for reinsurance pricing and decision-making.