Aon Benfield’s catastrophe model development team has introduced a new suite of terrorism solutions spanning the broking, consulting and reinsurance spectrum, in order to allow insurers to better understand terrorism risk.
The team’s terrorism risk experts have used Computational Fluid Dynamics (CFD) software developed over many years in conjunction with the US military and government to define an explosion and how it moves within a three-dimensional urban environment.
This approach is used by the New York Police Department and federal security agencies to plan preparedness, resilience and surveillance strategies with regards to terrorist attacks.
The new approach breaks from traditional blast radius modelling by taking into account a number of nuances that are absent in current blast analysis that can have a substantial impact on the losses.
Mark Lynch, who leads political risk model development at Aon Benfield’s Impact Forecasting team, commented: “As insurers look to grow their books of business, this tool will help them manage risk more strategically providing important insight for underwriters, reinsurance buyers and exposure managers.”
“Most encouragingly, we can now apply CFD analysis to any city across the world upon client request, quantifying the effect of location and blast size uncertainties to highlight the variation of the possible impacts.”
Aon’s in-house security experts will assist insurers in identifying bespoke scenarios by analysing both the size and location of a potential blast depending on the security procedures in place coupled with the operational and ideological changes in global terrorism.
Ed Ryan, a senior managing director with Aon Benfield, added: “This next step in the advancement of modelling terrorism events, and the reduction in uncertainty it provides, reflects Aon Benfield’s continuing effort to deliver value to our clients.”
“The competitive advantage provided with the better understanding of the peril gives clients an enhanced underwriting tool and allows for more efficient capital allocation.”
Aon Benfield has claimed that this new approach in blast engineering complements other Aon tools to help reinsurers and insurers better understand aggregation and model probable maximum losses from global terrorism.
