Adapting to new risk landscapes with clever data: PERILS

The world of risk is evolving fast, and with secondary perils becoming more frequent, industry leaders such as Christoph Oehy, chief executive officer of PERILS, are racing to adapt.

Speaking to Baden-Baden Today, Oehy highlighted the growing challenges posed by secondary perils such as hail and severe convective storms (SCS), which have become more frequent and severe.

“We’re going to see more and more of these extreme weather events.”

“Recent major hail or convective storm events have shown that they can cause very significant damage,” Oehy explained.

“We can see that globally there has been a huge increase in the frequency of large hail events, for example.”

This rising trend in secondary perils is not just about more frequent storms but also about increased exposure and vulnerability.

“The concentration of values is continuously increasing, as is the impact of climate change.

“We’re going to see more and more of these extreme weather events,” Oehy noted.

SCS alone offer context on this. In 2023, global insured losses from SCS accumulated to $64 billion, comprising more than half the insured losses from all natural catastrophes last year. That continued a worrying trend of increasing losses over the past decades—and 2024 has been just as bad. In the first half of 2024, SCS led to insured losses of $42 billion globally

For Oehy, it’s clear that the reinsurer’s role has changed: the entire industry must adapt quickly—and together—to these emerging threats, using data and innovation to stay one step ahead.

Driven by data

Data plays a central role in how PERILS supports the reinsurance industry in understanding and quantifying secondary perils. 

“For each event loss estimate, we rely on the data provided by the industry. The same methodology is applied irrespective of whether it is a primary or a secondary peril,” Oehy explained.

“Thanks to our many data providers, the insurance companies that are prepared to share their data with us, every event provides new insights.”

This continuous stream of data helps improve accuracy, particularly for events such as hailstorms, which have been challenging to predict and assess until recently.

Looking at the future of secondary peril data, Oehy explained how PERILS’ experience collecting hail exposure and loss data in Canada and Australia for many years had helped it refine models for Europe.

PERILS is already conducting a feasibility study on hail in Europe, and Oehy stated: “If all goes well, we plan to start reporting on it in 2025.”

Oehy acknowledged that climate change was not just increasing the number of extreme weather events, but also the complexity of the risks they posed.

“For the reinsurer, and frankly, for the whole industry, there’s now an urgent need to better understand and more accurately assess the risk.”

New risk models and an increased focus on gathering accurate exposure data are key to helping the industry cope with the mounting challenges of climate change, and with secondary perils gaining more prominence, Oehy sees changes ahead for how risk transfer mechanisms might evolve. 

“I could imagine that in the future, secondary perils could attract more attention for earning protections, be it in the form of aggregate-type industry loss warranty (ILW) structures or some tailored protections for certain regions where they can create significant losses.”

Collaborating for success

Collaboration, according to Oehy, is at the heart of PERILS’ approach, and the company works closely with insurers and reinsurers to ensure that the data they collect is not only accurate but also timely and actionable.

“Collaboration is one of our core values, and it’s very important to us: data is provided to us in a timely, structured way, so that we can bring that back to the industry.”

Looking ahead, PERILS is developing a new platform that will make it even easier for clients to access vital data. “It will present exposure and loss data at your fingertips in a very intuitive and visual way,” Oehy said.

This platform will eventually offer more advanced tools such as forecasting and benchmarking, giving clients a comprehensive view of risks and helping them make faster, better-informed decisions.

As PERILS celebrates its 15th anniversary, and Oehy completes his first year at the company, the CEO reflected on the company’s evolution and its ongoing commitment to the reinsurance industry. 

“For those 15 years, the key element was that we were created by the industry, for the industry, specifically to listen to its needs,” Oehy said. “That’s what we will continue to do.”

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