It is predicted that climate change impacts will include more severe and frequent disasters from heat waves, diseases, storms, and floods. Whether or not such predictions prove to be accurate, it must be accepted that our weather has become more unsettled in recent decades, especially in Africa where records are regularly being broken. It can be difficult to reflect exposure in underwriting terms and insurers should try to avoid falling into the trap of assuming that just because a property is in an exposed location, then the risk is necessarily higher. Nevertheless, it is being reported in the Ghanaian media that a growing number of insurers are refusing to provide cover in high-flood risk areas and there has been growing public concern over this issue.

Question You have been approached by the President of the Ghana Insurance Association (GIA). The insurance industry has to react to such conditions and evolve. In this respect, the association will be organizing a congress for insurers wherein issues and challenges will be debated with the hope of launching policy benchmarks aimed at providing guidelines for catastrophe underwriters. You have been asked to prepare an introductory presentation to stimulate discussion. In your presentation:

Analyse what aspects of exposure cat models can assist insurers measure.

Examine how reinsurance can help insurers diminish impact on loss aggregations.

Evaluate pricing models that are adequate to factor in catastrophes.