Risk modeling to boost our performance

How can AXA ensure it will always be able to compensate customers, regardless of the scale of the events they may face, while keeping premiums at the right price? Best placed to the answer this question is the Group’s risk management and underwriting department specialized in natural risks, which has recently assembled complementary skills to build and manage a standardized risk framework.

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Modeling thousands of scenarios

AXA Group assesses its exposure to natural risks and the capital required to cover them using an internal model built by its modeling specialists. Coming from academic and actuary backgrounds, these experts evaluate potential losses due to natural hazards (storms, floods, earthquakes, hailstones, etc.) based on physical laws and criteria, taking into account three main variables: location, potential vulnerability and reinsurance availability. To do so, they collect comprehensive data from all AXA entities worldwide. They also observe each country’s exposure to risk, backed up by precise GPS data. In addition, they work with engineering and research teams, especially from the AXA Research Fund, to better understand natural phenomena.

Once consolidated, this information enables our experts to simulate the thousands of typical years for each type of hazard and possible context, integrating every possible natural event, with its scope, sequence and impact. These scenarios enable AXA to estimate the probable costs and reinsurance requirements for the coming year.

Formulating a pricing and underwriting strategy

Our underwriting experts go back to the model and adjust it to each entity’s claims experience. This enables them to define the technical rate of each natural risk and the measures that should be taken to optimize each entity’s portfolio.

The entities can access the Group’s natural-risk underwriting plan through a new underwriting assistance platform, developed fully in-house. This pricing and portfolio management tool makes life easier for underwriters, while offering them more autonomy.

Proactively identifying customers eligible for claims

While enabling clients to receive fair price quotes, this platform also provides innovative solutions to improve assistance during a claim. Equipped with a mapping tool, it allows each entity to visualize the areas impacted by a natural disaster and identify customers who may have been impacted. AXA teams can then contact them proactively without waiting for them to submit a claim. Finally, the data related to these events are entered into the internal model, enabling our underwriting experts to further refine AXA’s underwriting policy.