1. Earth Observation and Global Change April 22, 2008 AMS Public Private Partnership Forum Frank Nutter Reinsurance Association of America

2.   2005 – $103 B   2004 – $ 45 B   Of 20 most costly – 18 since 1990   1/3 of total insured risk is “cat” risk   NFIP   Black Swans? Catastrophic Losses: An Insurance Perspective

3. Attribution of Losses  Urbanization  Values at Risk  Population Shift  Weather / Climate

4. Assessing Risk  RMS  AIR  EQE

5. Hierarchy of Perils Peak Off Peak Secondary   US Hurricane   California Earthquake   European Wind   Japanese Earthquake   Japan Typhoon   Tornado/Hail   Floods   Storm Surge   Coastal Flooding   Inland Flooding   Tsunami   Fire Following Earthquake

6. An Insurer’s “Cat” Strategy  Quantification of Risk  Pricing Risk  Hedging

7. A Progressive (Re)insurer’s Strategy  Assess client climate exposure  Sell catastrophic reinsurance  Provide risk transfer products  Capital markets products  Weather derivatives  Investment in alternative energy  Carbon trading and guarantees  Footprint  Employee incentives

8. Research Needs  Extend the historical record  Land fall probabilities with wind speed  Storm tracks  Correlations, if any, between regions  Extremes and outliers  Hurricane power/size  Sea level rise and storm surge  Potential for abrupt events

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