Open-source collaboration accelerates
Oasis: Open-source collaboration accelerates
Earlier this month the 6th annual Oasis Conference took place. While the previous year the social distancing restrictions had made it necessary to stay fully virtual, this time around Swiss Re was able to mount a hybrid conference format that made it possible for more than fifty guests to meet again in person at the wonderful Centre for Global Dialogue.
Oasis Loss Modelling Framework (Oasis LMF) provides an open-source platform that eases the exchange of catastrophe models. This allows the insurance industry to access models from new model providers, thus increasing the diversity of models and risk views to choose from. The Oasis journey began ten years ago and has been actively supported by Swiss Re – and today the framework is widely used, providing a cost-efficient and transparent alternative to traditional model vendor solutions.
The conference was opened by co-hosts Dickie Whitaker (CEO of Oasis) and Beat Aeberhardt (Head Cat Perils R&D at Swiss Re and Oasis board member). Dickie began by reminding the audience that Oasis helps with three key things that are consistently on the mind of senior re/insurance executives: Oasis helps increase efficiency and save costs; it enables companies to lead the transformation (and not be disrupted instead); and, of course, it improves understanding of risk.
The open-source environment and offering, as was clear to everyone, has no downside: The more organizations opt in, collaborate and use Oasis, the more they become part of the solution that helps everyone across the globe to better navigate the many natural catastrophe perils we face today and in coming decades. Climate change was, as will come as no surprise, a major topic at the conference, with experts taking a closer look at the IPCC's latest findings.
In his opening, Beat highlighted Oasis' level of acceleration, with major insurance players and the IDF (Insurance Development Forum) committing additional funds over the coming years to strengthen usage of standards and further increase performance and reliability to make Oasis fully "enterprise ready" for broader use by smaller companies with fewer in-house capabilities. But, to be clear, Oasis is already very much in use. Beat explained that, by now, more than twenty companies provide models in an Oasis format – and more than one hundred models can be licensed directly by the model providers. There are companies that use Oasis internally for their entire modelling framework, some that provide solutions based on Oasis, and a lot of companies that already build on Oasis.
Collaboration, a core proposition of Oasis, was also successfully on display when Beat shared the combined efforts with GEM (Global Earthquake Model), Hannover Re, Partner Re, NTU Singapore and Guy Carpenter to develop an earthquake loss model for China. In closing, Beat highlighted a quote by Swiss Re's Group Chief Underwriting Officer and Chairman of the Swiss Re Institute, Thierry Léger, a quote that's worth sharing here as it sums up perfectly why such open-source collaborations are essential:
"With its principles for standardization, modularity and transparency, the Oasis platform is a catalyst for improving collaboration in the Cat modelling universe. This translates into expanded access to a greater diversity of risk views and risk models, enabling the ability to leverage the right models for the right purpose."
The conference was recorded and can be viewed in full here.
Below, in brief, simply a few additional thoughts, and links to the various presentations. The first part of the conference was focused on use cases with both Simos Koumoutsaris (Senior VP at Guy Carpenter) and Andreas Zbinden (Senior Cat Model Specialist at Swiss Re) showcasing the extensive worth both Swiss Re and Guy Carpenter are doing in operationalizing Oasis. Guy Carpenter, as Simos explained, uses Oasis extensively in four environments and six calculation engines. More than fifty of their cat modelers are using it to run 100+ analyses per week. On the Swiss Re side, Andreas showcased how Oasis, integrated in Swiss Re's proprietary CatServer, provides users with a wide variety of alternative risk views.
Next up were Thierry Seiler (Head of Strategy Execution at Zurich) and Robert Bartlett (Industry Partner at Motive Partners), unveiled an Oasis-leveraging effort called "Big Ticket," an envisioned neutral digital infrastructure to fast-track efficiency and innovation in our industry. Nick Moody (Independent Consultant with IDF) then gave an update on the Insurance Development Forum's Oasis-related efforts, in particular with regard to the IDF's Risk Management Steering Group. There's a great deal of work being done – again, in part thanks to Oasis – toward a comprehensive global resilience index.
The second half of the conference was given to an illustrious panel and a focus on understanding climate risk. The panelists were Christoph Raible (Professor at the University of Berne), Judith Ellison (Cat Modelling Manager at JBA), Matthias Hackl (Head of Cat R&D at Allianz Re), Steve Bowen (Head of Catastrophe Insight at Aon) and moderator Mathias Graf (Head of Cat Research and Development at Zurich).
A particular highlight was Christoph Raible's assessment of the latest IPCC Report. As the professor explained, the current report's findings are consistent with the previous iterations and uncertainties are further reduced. He also noted that we are not on track to limit ourselves to the 1.5 degree warming as set by the Paris agreement. As a result, more of what might have happened, will happen – and mitigation measures will need to be intensified. A particular focus is therefore needed with regard to catastrophe models and a robust incorporation of IPCC research findings. For example, while tropical cyclone projections show significant reductions in their total number (and in particular also those making landfall), projections clearly show increased intensity of future tropical cyclones.
The presentations of all panelists indicated just how much work is being done on a great many fronts – and just how much more is required to mitigate the climate change-induced challenges over the course of the coming decades. As one panelist said, "We need to spend money to save money," and added that building to meet the impacts of yesterday is a recipe for disaster. And one might say that is very much to the point with regard to both physical infrastructure and digital/modelling platforms. The impacts of tomorrow will deliver greater severity – preparedness is all. For the experts in the room, for now, the questions that need addressing are: How well do our cat models reflect extreme weather events under present day climate? And how well can climate projection models reflect extreme events?
As Martin Bertogg (Head Cat Perils, Cyber & Geo at Swiss Re) remarked during the conference, "There is no respite in sight." The challenges will keep on coming and thus the need for an ever more robust quantitative risk assessment will only increase. The work of Oasis then, together with its increasing number of partners, is set to grow in models, in scope, in collaborations and in its sheer importance for a more resilient world.
Oasis CEO Dickie Whitaker closed the event with a few summarizing remarks. The presented insights had shown the complexity of the challenges, and that even the big players have a hard time grappling with understanding and solving them. He asked, succinctly, if it's already a challenge for the big players, how then are smaller players with fewer resources supposed to deliver their best? The answer to the question, Dickie said, is open-source collaboration, the answer is Oasis.
In closing, both he and Beat Aeberhardt called for even more commitment and collaboration across the globe to get to common standards and common frameworks. They thanked the many involved in helping to make Oasis successful over the course of its ten-year journey and highlighted once more how pleasant it was to finally meet in person again. The large number of participants was clear affirmation of the need for better understanding and more models in view of the massive perils ahead – and so there's no doubt that the work of Oasis will continue to accelerate – and that there will be a next annual Oasis Conference at Swiss Re in 2022!