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Simply put, reinsurance is insurance for insurance companies. Reinsurance companies need to understand the probability of risk in order to price reinsurance contracts. In other words, what is the likelihood of a hurricane, tornado, or flood in a given area? Reinsurers develop peril-specific catastrophe or CAT models—highly sophisticated computer-generated models—that estimate economic losses from natural and man-made disasters.  

‚ÄčNCEI provides meteorological information such as global tropical cyclone track data, severe convective storm data (for tornado and hail), as well Reinsuance inforgraphicas temperature and precipitation data. The development of CAT models uses these data to understand the characteristics of disasters and their probability; also to test how well the CAT models performed, These data also test the performance of CAT models against what actually occurred.

image of Mark Bove“NCEI data is invaluable to the reinsurance industry, and it would be really hard to put a tangible price tag on it. Everything that is being compiled and maintained is the foundation for so many transactions in the financial sector that, without it, we would lose literally billions of dollars of economic activity in the United States.” —Mark Bove, Senior Meteorologist, MunichRe North America

Once reinsurers understand the probability of risk, they can provide coverage to insurance companies in exchange for a premium. NCEI’s data provides reinsurers with the information they need to run their businesses, and it protects the insurance sector from economic collapse.

Reinsurance companies use NCEI's hurricane track data to develop catastrophe models. 

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Devastation caused by Hurricane Andrew