An article here in InsuranceERM quotes Nita Madhav, chief executive of epidemic risk analytics company Metabiota, as saying that insurers are not prepared to model the effect of crises such as the current coronavirus one.
From the insurance sector perspective, they are not well prepared to handle epidemics,” says Madhav. “A lot of times companies are applying very crude shock scenarios to the portfolio. For example, they are not taking into account the difference in countries preparedness. It is an area where insurers are not embracing the full power cat [catastrophe] modelling can bring.
I would not be surprised. The shape of the curves I have been posting in our cvirus coverage is not a biological property of the virus itself. With no concerted action, the curve will keep on rising and will only flatten out when pretty everyone is either infected and recovered, or die. The flattening effect is caused by the concerted action, and different administrations will have different reaction times to the crisis.
Can insurers model anything, we wonder?