Aon Benfield, the global reinsurance intermediary and capital advisor of Aon, has launched a stochastic modelling platform to evaluate the key risks of long term products and more accurately influence reinsurance purchases, predict cash flow and analyse financial strategies.

The launch of the product, which is called ReMetrica for Life, Health & Pensions, comes as life insurers, reinsurers and pension funds are being driven by regulations, rating agencies and shareholders to shift from traditional scenario-based modelling to develop a stochastic view of their key risks, according to Aon Benfield.

Rather than looking at individual scenarios, this approach means companies can take into account the frequency and duration of events that could trigger claims – plus explore their variations to allow for uncertainties in the results.

In response, Aon Benfield said it developed ReMetrica for Life, Health & Pensions to provide a fully stochastic framework that empowers insurers and their actuaries to answer challenges including optimising capital requirements; improving Solvency II infrastructure; and effectively evaluating many reinsurance structures in one simulation.

For example, in life insurance, Aon Benfield said any life product such as term assurance, endowments and whole of life can be modelled, as well as extreme events including pandemics or a mass lapse shock that is correlated to an economic variable.

Irfan Akhtar, head of development for ReMetrica for Life, Health & Pensions, said: "Unlike most of its peers, the platform has been built as a stochastic tool from inception, rather than simply adding to a deterministic model, and also uses a ground-breaking approach to modelling multi-states."

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