The combination of your forecasting models, a forward-looking capital regime and business models built around short-term policies means general insurers are well-placed to manage physical risks in the near term. 14  See Met Office research into climate http://www.metoffice.gov.uk/media/pdf/t/r/UK.pdf. 15  A Lloyd’s report (“Catastrophe Modelling and Climate Change” - 2014) looks at factors that influence the impact of hurricanes. It notes the importance of sea-level changes – in addition to wind speed and tides – in the impact of Sandy on New York. See www.lloyds.com/~/media/Lloyds/Reports/Emerging%20Risk%20Reports/CC%20and%20modelling%20templa te%20V6.pdf. 16  As the PRA’s report to Defra notes, major catastrophe events have often driven innovations in risk management. For example, following Hurricane Andrew (1992, $ billion uninflated insured losses) and the associated insolvency of eight insurance companies, the industry developed a more sophisticated approach to assessing catastrophe risk, and became more resilient to similar events. BIS central bankers’ speeches  observations,  projections  and  impacts  –  5  But further ahead, increasing levels of physical risk due to climate change could present significant challenges to general insurance business models. Improvements in risk modelling must be unrelenting as loss frequency and severity shifts with: –  Insurance extending into new markets not covered by existing models;  –  Previously unanticipated risks coming to the fore; and  –  Increasingly volatile weather trends and hydrological cycles making the future everharder to predict. For example, the extent to which European windstorms occur in clusters 17 could increase the frequency of catastrophes and reduce diversification benefits.
The BIS has the long tradition of being a very good avenue for global central banks and regulators to address common issues like these. And it is clear the visionary decision to set up the BISIH will serve to provide a valuable focal point for the central banking community in the many years to come. 20. In this regard, we would like to express our full support to the BISIH to continue promoting collaborations among central banks and delivering ideas and insights that would help the global banking system move with technological developments in an efficient, secure and sound manner for the benefit of the community at large. Lastly, I wish this Summit a great success. Thank you very much. 3/3  BIS central bankers' speeches