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🌪️ '''Catastrophe modelling platform''' is a specialized analytical system that simulates the financial impact of natural and man-made catastrophic events — such as hurricanes, earthquakes, floods, wildfires, and cyber attacks — on [[Definition:Insurance carrier | insurance]] and [[Definition:Reinsurance | reinsurance]] portfolios. These platforms sit at the heart of how the industry quantifies and prices [[Definition:Catastrophe risk | catastrophe risk]], combining hazard science, engineering vulnerability models, and financial exposure databases to generate probabilistic estimates of losses across thousands of simulated event scenarios. The three historically dominant vendors — RMS (now Moody's RMS), AIR Worldwide (now Verisk), and CoreLogic — have long provided the industry's reference models, though a new generation of open-source and [[Definition:Insurtech | insurtech]]-driven platforms is expanding the landscape.

🖥️ A catastrophe modelling platform typically operates through four interconnected modules. The hazard module generates a stochastic event set — tens of thousands of plausible catastrophe events with associated intensity footprints (wind speed, ground shaking, flood depth, etc.). The vulnerability module estimates physical damage to insured structures based on their construction type, occupancy, and location relative to each event's footprint. The financial module then applies [[Definition:Insurance policy | policy]] terms — [[Definition:Deductible | deductibles]], [[Definition:Policy limit | limits]], [[Definition:Reinsurance | reinsurance]] structures, and [[Definition:Co-insurance | co-insurance]] provisions — to translate physical damage into insured losses. Finally, the output produces key metrics such as [[Definition:Average annual loss (AAL) | average annual loss]], [[Definition:Probable maximum loss (PML) | probable maximum loss]], and full exceedance probability curves. Insurers, reinsurers, [[Definition:Insurance-linked securities (ILS) | ILS]] funds, and [[Definition:Rating agency | rating agencies]] all rely on these outputs for [[Definition:Underwriting | underwriting]] decisions, [[Definition:Capital management | capital allocation]], and regulatory compliance under frameworks like [[Definition:Solvency II | Solvency II]] and the [[Definition:National Association of Insurance Commissioners (NAIC) | NAIC's]] risk-based capital requirements.

💡 Catastrophe modelling platforms exert enormous influence over the allocation of capital and the pricing of risk across global insurance markets. A model update — say, a revised view of North Atlantic hurricane frequency or Japanese earthquake fault segmentation — can shift reinsurance pricing by billions of dollars in aggregate. This concentration of influence in a small number of vendor models has drawn regulatory attention, with supervisors in the UK, EU, and Bermuda encouraging insurers to understand model assumptions rather than treat outputs as black-box answers. The emergence of climate change as a forward-looking risk driver is also pushing the platforms to evolve beyond historical calibration toward climate-conditioned views of future hazard, a methodological frontier that is reshaping how the industry thinks about long-tail [[Definition:Exposure | exposures]] and portfolio sustainability.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Catastrophe risk]]
* [[Definition:Probable maximum loss (PML)]]
* [[Definition:Average annual loss (AAL)]]
* [[Definition:Insurance-linked securities (ILS)]]
* [[Definition:Exposure management]]
* [[Definition:Solvency II]]
{{Div col end}}

Definition:Catastrophe modelling platform - Revision history

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