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Guy Carpenter, a reinsurance company and part of Marsh & McLennan, has developed and introduced a financial modelling tool to evaluate flood damage for its Indian clients.
“The model tells the probability of having a flood in a particular area, based on which insurance companies will determine the price of that risk,” Nymphea Batra, CEO, and MD, Guy Carpenter India, Marsh India Insurance Brokers, told businessline.
The company estimates that floods represent 1/3 of all losses resulting from natural disasters in the country and cause damages of around $3.1 billion in 2021. “This tool was developed in India by our team and local embedded analytics teams of actuaries,” said Batra. Flood models are probabilistic and statistical in nature and have three specific components - scientific, engineering, and financial, she added.
Globally, modelling is used to estimate the reinsurance requirement of an insurance company, mainly in the property business. In addition to insurance companies, rating agencies, and government bodies also rely on these tools, according to the company. Guy Carpenter India has been operating in the country since 2010 and caters to non-life and life insurance companies.
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Marsh & McLennan is a global professional services firm, headquartered in New York City with businesses in insurance brokerage, risk management, reinsurance services, talent management, investment advisory, and management consulting. It also runs Guy Carpenter, Marsh, Mercer, and Oliver Wyman. Marsh & McLennan reported a turnover of $20 billion in 2021.
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