It’s a gap WTW‘s climate and risk analytics team has been raising in a broader context too. Speaking to Insurance Business UK recently about how models handle interconnected risk, Ester Calavia Garsaball, Senior Director for Natural Catastrophe and Risk Financing in WTW‘s Climate Practice, pointed to business interruption as a particular weak spot. “Where I think the biggest gap is on the business interruption modelling, and this could lead to mispricing of risk,” she said, speaking generally rather than about Gravelines specifically, but the point applies just as well here. She raised a real example from her own casework that runs along similar lines: a semiconductor client hit by the 2021 Texas winter storm, where the problem wasn’t the client’s own site but the utility supplying it. The outage ran for one to two weeks, produced a serious business interruption loss, and led insurers to cut the client’s cover by $100 million before better modelling of the correlated utility risk helped restore it. It’s the same underlying failure mode as Gravelines: the loss doesn’t start at the client’s own fence line, and a model that only looks inside that fence line will miss it.
