The recent extreme weather in the US has caused devastation on a massive scale. Because of hurricanes like Harvey and Irma, people in Texas, Florida and the Caribbean have seen their lives and livelihoods washed away in an instant.
The actions of the insurance industry in the aftermath of disasters are critical. The industry has a major role to play in getting people back on their feet, in the recovery of economies, and in the huge infrastructure rebuilding projects that are necessary for restoration and renewal. The faster that valid claims are paid, the better it is for everyone; it's a very tangible example of serving the public interest.
So-called '1 in 500' events are becoming far more frequent than the probability would suggest. Indeed, Harvey was Houston's third '500-year' flood in the past three years. We may have seen similar - in some cases, worse - levels of destruction caused by other hurricanes in the Caribbean and US in the past, but the frequency with which they are taking place is unprecedented. And without a precedent, how can we use the past to adequately predict what will happen in the future?
The IFoA's motto broadly translates as 'reason from experience'. Despite advances in techniques and technologies, we are still a profession that relies heavily on what has gone before. But it is getting harder and harder to trust past methodologies. In a rapidly changing world, many of these are already obsolete or not relevant to their traditional applications.
So how do we get better at predicting catastrophic events, and how do we get better at developing the right products for these events?
There are pockets of innovation that demonstrate how technology can help. There's some exciting catastrophe modelling work being undertaken by our members in disaster-prone regions, as well as companies making use of drones and satellite imagery to assess flood damage to speed up claims processing. However, in a rapidly changing world, I would argue that isolated innovations are not taking place on a big enough scale to make a global difference.
Having taken part in the IFoA's Global Data Science Summit a couple of weeks ago, I can say that the use of advanced data analytics is at least part of the answer. Much of the underlying technology is already here, but we need to exploit it. Our members' research will be absolutely critical; those with the insights, knowledge and creativity to push the boundaries will drive the profession forward.
The IFoA research programme typically has over 100 initiatives on the go at any one time. If you think you can make a difference, I'd urge you to join a working party that can benefit from your insights - or, indeed, think about setting up your own.
With the wealth of talent that's in our profession, I am confident that it will continue to adapt. But we must grasp the opportunities with both hands and drive the changes rather than react to them.
We can't rely on the past or sit on our laurels and expect the profession to continue to be sought after.
If you'd like to get involved in the IFoA's research initiatives, please contact [email protected]
Derek Cribb is the chief executive of the Institute and Faculty of Actuaries
