Climate resilience refers to the recognition and planning by individuals, businesses, and governments of the influence of climate on specific hazards. Whether various aspects of climate are static or changing, whether the changes occur slowly or quickly, and whatever the cause, the right solutions for resilience are often similar. The stakes are raised when it comes to extreme events such as wildfires, hurricanes, floods, severe storms, winter storms, and earthquakes.
Milliman’s climate resilience team can help define scenarios, specify and model hazards, and develop options for resilience that offer clear insight into costs, benefits, and uncertainty. Our initial focus is on insurable property hazards and how they are affected by climate.
More than 30 years ago, the insurance industry helped pioneer catastrophe modeling to predict insurable exposures under a variety of extreme events at defined probabilities. Recently, modeling has become increasingly climate-aware, and Milliman knows how to design and implement insurance frameworks that align with these modeled risks. Geographic precision has also been supercharged by technology in recent times, enabling stakeholders to “zoom in” and differentiate risks in much greater detail. Milliman uses the latest tools to study both macro shifts in climate and their micro effect on communities, thereby improving risk signals and customizing resilience solutions.
Who are our clients?
Milliman works with insurers, reinsurers, investment funds, governments, non-profit organizations, and industrial organizations to address a variety of climate resilience questions.
What do we do?
Our consultants design and price insurance and risk financing frameworks. We understand every aspect of the insurance value chain, from global wealth funds providing capital for natural hazard risk to homeowners’ insurance policies that cover a single household’s most valuable possessions. We know how risk signals flow from scientific models, through complex geographic and actuarial plans, to the premium charges that are paid by consumers and regulated by individual states. We also have a deep understanding of catastrophic perils such as wildfire, hurricane, flood, earthquake, and severe/winter storms. We work with our clients to interpret findings under baseline scenarios and stress scenarios reflecting climate change, as well as mitigating scenarios enabled by resilience investments. We understand the role of risk signals in the broader economy and are positioned to provide independent transactional assistance with respect to programs that insure and finance risk or fund resilience investments.
Some of our services include:
- Feasibility studies. We assist private enterprises in entering the flood insurance business, expanding affordable coverage options in an environment of frequent extreme tropical and non-tropical flood-producing storms. Similar studies can be developed for wildfire, hurricane, and other perils requiring large amounts of start-up risk capital.
- Product development and pricing. We assist companies in developing insurance and mitigation products that meet the needs of customers and investors, and translate the outputs of risk models into risk-aligned, fair, and practical rating plans.
- Regulatory and filing support. We perform regulatory research to understand how to implement innovative solutions that comply with state insurance regulation, and we create and support the associated filings with state regulators.
- Federal flood insurance. We are performing an actuarial redesign of the National Flood Insurance Program’s rates, including modernization and improved granularity of rating elements. The purpose of the redesign is to enable better communication of risk signals and greater uptake of flood insurance that will reduce uninsured and underinsured losses in future disasters.
- White papers. We study specific topics related to catastrophe risk and resilience at the request of trade associations in insurance, real estate, and other industries. Our independent, objective, and thorough research is used to educate lawmakers, investors, and other stakeholders making crucial policy decisions.
- Disclosure and ratings agency assistance. We use the global frameworks laid out by the G20 Task Force on Climate Disclosures and other groups to build deliverables addressing insurable risk and how it changes under non-stationary climate assumptions.
Milliman uses advanced geography, machine learning, and new data streams to validate scientific climate scenarios and models and builds pricing and risk scoring plans that can tell a low-risk property from a high-risk neighbor. As insurtech advances and a new generation of consumers gets comfortable buying customized risk protection in a changing climate, we support risk analysis that is on-demand and customized.
Milliman is a trusted adviser as clients grapple with the nexus of hazard, climate, resilience, and insurance.