A new agreement between the NOAA and NSF will support the creation of the new facility.
The National Oceanic and Atmospheric Administration (NOAA) and National Science Foundation (NSF) have reached an agreement to establish a research center in order to help meet the changing needs of the insurance industry due to climate change.
Insurers and reinsurers are among those experiencing the earliest repercussions of climate change.
Moreover, the reinsurance and insurance industry are also among those who must develop a specific response to climate change. It must adapt to rapidly changing weather, societal, and financial risks and use catastrophe models that are going out of date at an increasing rate.
The new agreement between the NOAA and the NSF is meant to provide support to the creation of an Industry-University Cooperative Research Center (IUCRC). The focus of the IUCRC is on catastrophic impact and risk assessment modeling of climate change. The goal is to provide useful information that insurers and reinsurers will be able to use.
The goal is to provide the insurance industry with the support it needs as climate change impact unfolds.
“Traditionally, catastrophe modeling looks at past events while climate modeling looks to the future,” said Sarah Kapnick, PhD., Chief Scientist at the NOAA. “We need a new and improved way of combining these approaches in order to address the challenges that are being accelerated by our rapidly changing climate. Combining climate and catastrophe models with the goal of producing better decision making tools is a game changer for the insurance, reinsurance and mortgage industries. Additionally, we need to not only develop the science and tools in this space, but also the workforce capacity to put knowledge into action.”
The catastrophe models that will be developed and adapted at the new center will be based on historical data of extremes and damages, science, building codes, and physical asset information. It will help to inform estimates of current and future financial damages caused by extreme weather and climate events.
Catastrophe models haven’t conventionally included seasonal-to decadal or climate predictions. Early research has indicated that climate change risks are not likely being accurately predicted by the insurance industry.