QBE is rolling out new catastrophe modelling methods in Australia after success overseas using updated technology and more precise data.  

Catastrophe research head Joanna Aldridge says innovation is fast reshaping risk prediction.

“We’ve already put these models to work across our international markets – rolled out across North America and Europe – and we’re buzzing with excitement to proceed and roll out locally,” Dr Aldridge said.  

“The next generation of catastrophe models is now on the horizon and they’re not just upgrades; these are game-changers – these next-gen models redefine every part of the equation, tackling limitations that we’ve been living with for years.”

Addressing last week’s Beyond the Buzzwords seminar in Sydney, she said catastrophe risk management “can be a lot of statistics and jargon” and it has not evolved significantly in recent years, with frameworks largely unchanged in Australia.  

That is now changing as the industry faces a “major shift” in which “innovation is reshaping the field – it’s no longer optional, it’s transforming our industry”.

Insurers can model risk in ways more specific to individual locations, buildings and seasons, and innovation is “transforming catastrophe risk from the inside out”.  

“We’re not just looking at past averages any more,” Dr Aldridge said. “We can use real climate drivers to get ahead of the curve before the season even starts.

“This matters in reinsurance discussions, portfolio steering and underwriting decisions in high-risk regions.

“These models don’t just look at space, they look at time – they can catch the year-to-year differences driven by climate patterns.”

QBE has partnered with insurtechs to model flood, hail, earthquakes and cyclones.

It simulates millions of synthetic events and applies a hazard footprint and vulnerability damage rating, from which it determines deductible limits and policy conditions.  

“By averaging the losses across all these synthetic events, we come up with a technical premium and return-period losses to guide our reinsurance strategy. It’s a powerful framework, and it’s starting to evolve,” Dr Aldridge said.  

"The hazard is defined at ultra-high resolution. We’re seeing fully functional models for the secondary perils, for hail and flood ... which has always been a gap here in Australia.  

“The models are getting seriously detailed, they include granular rating factors that reflect our building environment, customisable to match ... basements, roof, tiles, mitigation features, vegetation ... All of this is explicitly modelled.”

Dr Aldridge noted granular data has been used in Australia for about 15 years, and during that time some flood premiums have climbed to $35,000.

Asked if precision underwriting will create “an uninsurable underclass”, she said: “I think we’re already there,” and the only sustainable path to managing and insuring catastrophe risk is through resilience. “It comes down to a matter of land use planning and a serious discussion about relocation.”  

Dr Aldridge wants cyclone pressure considerations expanded to building standards in southeast Queensland after “near misses” with major tropical cyclones.  

“These improvements that we’re talking about are relatively inexpensive and they can dramatically improve the risk profile buildings. This is a high-impact, low-cost opportunity to build a safer and more resilient future.”

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