TMR Case Study: HAMLET

September 7, 2017

Imagine, for a moment, rocks as big as 15 centimeters or 6 inches in diameter falling on your home and automobile. That’s essentially what happened in Germany in July and August of 2013 when three giant hailstorms caused an industry loss of up to EUR 3 billion. It was the largest hail event observed since the one in Munich in 1984, which caused a similar amount of damage. Over the last three decades, insurance companies have reported a significant increase in losses due to severe hail damage to properties and motor vehicles. This trend coincides with recent observations from the scientific community showing a significant increase in hailstorms throughout Europe, yet hail remains underestimated in both severity and frequency. Joining perils such as hurricanes, earthquakes and floods, the threat of hail is here to stay.

A Problem in Need of a SolutionUpon identifying the underestimated hail trend, TMR partnered with the Karlsruhe Institute of Technology (KIT) to create a new, more effective modelling approach to manage hail risk. Calling it Hail Model for Europe by Tokio (HAMLET™), the new solution correlates property and motor insurance risks, as well as the large loss potential to an insurer’s portfolio. Using the latest scientific and insurance knowledge, HAMLET™ provides a very detailed, quantitative view of European hail exposure. The insights gained from our model allows TMR and its customers the ability to manage hail risk more efficiently in the future.

Event SetHAMLET™ uses an innovative methodology aimed at a hazard event set that spans over 1,000 years. Weather radar data of more than 750 historic hail events provides the best blueprint of European hail risk at 1x1km spatial and 15-minute temporal resolution. (HAMLET™ is one of the first models to achieve this level of spatial resolution and immediacy for motor and property risks.) Lightning information, satellite data and numerical weather models (COSMO2) are all used as additional data sources, generating a comprehensive picture of the nature of hailstorms. The high temporal resolution of the model permits a realistic simulation of motor losses.

Motor ExposureHAMLET™ is the first model of its kind to provide deep insight into motor damage exposures from hail in Europe. Using data from more than 45 million streets, procured from a leading traffic-data provider, we capture the best daily traffic information. The skillfully designed amalgamation of the road traffic model tracks the number of cars for any street, and its corresponding traffic pattern measured over a day. This foundation of the motor exposure model enables us to model immediate traffic patterns during an event.

Property Exposure In addition to the motor exposure model, HAMLET™ incorporates property exposure data, such as street level and coordinates, and considers the wide spread of different building types within several lines of business (residential, commercial and agricultural). This enables us to obtain a detailed view and identifies significant regional differences in exposure.

Transparency and Collaboration for Tailored Services As part of our emphasis on transparency and collaboration to gain a better understanding of catastrophe risks and to provide tailored services, we can share the insights gained from HAMLET™ with our customers and invite them to share motor and property claims data collected from recently experienced hail events to discuss how HAMLET™ could be of assistance to our customers in analysing their individual portfolios.

Advancing The Catastrophe Risk Understanding Four years after the three hail storms that struck Germany, TMR has become well known for its expertise in hail risk and hail model development. TMR has presented results at several scientific and industry conferences and has contributed to chapters in books on natural catastrophe modeling. Since its introduction, HAMLET™, has already begun to improve pricing, and we will continue to develop significant expertise around hail modeling. In the coming years, TMR will be contributing to a project of the Swiss Federal Office for Meteorology and Climatology to better assess the hail climatology in Switzerland.

To find out more about HAMLET™, contact:

Peter Geissbuehler, PhD
Senior Vice President, Catastrophe Pricing
+41 43 283 6004

Stefan Ritz, PhD
Senior Catastrophe Pricing Analyst
+41 43 283 6027

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