“THE MODELLING WORK CARRIED OUT BY CCR IS ESSENTIAL TO INFORM THE CONSIDERATIONS AND DECISIONS OF THE STATE TO ENSURE THE SUSTAINABILITY OF THE SCHEME.”
ANTOINE QUANTIN,
Chief Underwriting Officer, Public Reinsurance & Guaranty Funds
INTRODUCTION
The year 2022 was marked by major climate-related events: numerous thunderstorms and hail episodes from May to July, particularly early extreme drought, accentuated by several heat waves over the summer, devastating forest fires, a storm in Corsica in August and tornadoes in October in Normandy and Hauts-de France.
These episodes are a reminder of the need to continuously improve risk management systems to be able to cope with these phenomena and their expected worsening due to climate change. Whether to improve prevention, crisis management or compensation, it is necessary to develop a better understanding of the perils to which French territories are exposed. As an essential link of the State’s risk management, CCR has developed a modelling chain that makes it possible to cross-reference hazards, whether natural or man-made, with economic issues in order to assess their financial impact.
This platform is essential for the efficiency of the compensation and risk prevention systems and to support the State in its thought process on the management of extreme risks. It has been developed and enriched over the years thanks to scientific partnerships with leading players in France, whether research centres, universities or Grandes Écoles.
Through these partnerships and with feedbacks from past events, CCR’s research and development teams contribute to the ongoing improvement of the models and their relevance. To date, CCR has focused on flood and drought risks, but it also studies other natural hazards and man-made phenomena that can have extreme consequences.
Thus, 2022 brought on many breakthroughs in geotechnical drought and earthquake modelling. Outside the scope of the Nat Cat scheme, CCR has also heavily invested in work on the impacts of climate risks on crops in the context of climate change.
As we approach the end of 2022, the financial equilibrium of the scheme is being challenged by an exceptional drought, which is expected to be the costliest event since the scheme’s inception in 1982, together with a major inflation shock that will specifically impact long-term risks. In this context, the modelling work carried out by CCR is essential to inform the State’s long-term considerations, but also in the shorter term, to ensure the sustainability of the scheme./
2022/2023 OUTLOOK
The CCR’s research and development work is aimed at improving knowledge of the economic consequences of natural and man-made catastrophes, which is essential to its mission to serve the State and the insurance market. This work is carried out in partnership with leading scientific organisations (notably Météo-France, INRAE, BRGM) which contribute their knowledge of hazards, which is essential to CCR’s economic analysis. This results in the development and ongoing improvement of numerical models to estimate the financial consequences of a catastrophe or to measure the potential economic exposure related to the occurrence of very rare events.
n the area of seismic risk and climate risk in agriculture, the 2023 work will capitalise on the findings of two theses successfully defended in 2022. The first thesis was carried out with the Institut AgroRennes-Angers and Météo-France on the impact of climate change on agricultural crop losses and the second with the École Nationale de Géologie de Nancy on the development of a stochastic earthquake generator.
Regarding the management of climate risks in agriculture and the development of insurance against such risks, CCR’s missions were expanded by an order published on 29 July 2022.
“SERVICES TO COMPANIES, LOCAL AUTHORITIES AND INSURERS WILL CONTINUE AND STRENGTHEN IN 2023.”
DAVID MONCOULON,
Head of the Modelling R&D Department
Work on these subjects will therefore increase in 2023, with, for example, the inclusion of frost and hail in our models. The work on seismic risks will continue in 2023 with a new doctoral thesis on the propagation of seismic waves using numerical mechanistic approaches. Finally, a thesis on the modelling of geotechnical drought is starting, linking three major organisations around this phenomenon: Météo-France / CNRM for the meteorological part, BRGM for the geological aspects and CCR for the economics.
As a sponsor of the new Geolearning Chair (Mines Paris Tech, INRAE), CCR is associated with various research projects that will be launched over the next five years. One of these theses will focus on a stochastic precipitation generator which will consider temporal and spatial correlations via innovative approaches.
Services to companies, local authorities and insurers will continue and expand in 2023. Among them, one of the major projects is the analysis of the vulnerability of the RTE electricity network to flooding and climate change, which will be delivered in March 2023 and will make it possible to target the most exposed structures to implement adaptation and prevention measures. At the request of other organisations, such preliminary studies are being carried out and assessed. The development of a multiperil damage platform, specific to CCR, is a major cross-cutting project for 2023.
It aims to reinforce the traceability of simulations, computing flexibility, by limiting dependence on the database and file system, robustness (in particular by now running on a Linux system) and flexibility in the deployment of calculations, with the emergence of hybrid ‘on premise/ cloud’ solutions. In other words, the aim is to have a platform that meets best market standards.
A new project to improve the modelling of vulnerability of insured assets was launched at the beginning of the year, with the aim of dealing with the various Nat Cat perils (floods, earthquakes, then drought) as well as agricultural risks by going beyond statistical analysis to establish the deterministic link between hazards and loss experience. This project will enhance our simulation platform with features that allow for relevant costbenefit analyses for prevention purposes. The year 2023 promises to be rich in new projects and CCR’s R&D activities will serve one of the company’s strategic axes, i.e. the expansion of its expertise in the perils covered (nat cat, terrorism) but also in new issues (cyber, agricultural, hail and frost)./