Spanish
Santo Domingo. - With the purpose of strengthening the insurance sector and consolidating the adequate risk management in the country, the Superintendence of Insurance of the Dominican Republic (SIS) held the discussion "Catastrophic Coverage for the Insurance Sector in the Dominican Republic", led by expert Ariel Hernández, Managing Director at BMS Re Latin America & Caribbean.
The meeting took place in the Auditorium of the Universidad Iberoamericana (UNIBE) and was attended by the Superintendent of Insurance, Julio César Valentín Jiminián; the Intendant, Francisco Campos; directors, managers and collaborators of the institution; as well as representatives of guilds, insurance companies, reinsurers and specialists in the sector.
The event, organized by the Technical and Reinsurance Directorate of SIS, also marked the beginning of the project for the information requirement on catastrophic fire coverage for the period 2025-2026, in accordance with Communiqué No. 206 issued by this Superintendency.
The technical director of SIS, José de la Cruz, highlighted in his opening remarks the relevance of the role of the insurance sector in the face of the high-risk profile of the Dominican Republic, frequently exposed to natural phenomena of great impact.
"The frequency and intensity of natural events have been altered, forcing us to rethink our actuarial models, our reinsurance structures and, above all, our ability to respond," he said.
Similarly, he called for reflection on how to strengthen catastrophic coverage, not only from a technical and financial perspective, but also from a vision of social responsibility.
"Climate change is an evident reality. I am convinced that, with will, innovation and cooperation, we can build a more resilient, more inclusive and better prepared insurance market to face the challenges ahead," he assured.
Catastrophic modeling as a strategic tool
During his presentation, specialist Ariel Hernández explained the strategic role of catastrophe modeling in the insurance sector, as a tool to estimate potential losses in the face of large-scale natural events, such as hurricanes or earthquakes.
He pointed out that this approach combines knowledge of engineering, meteorology, seismology, and actuarial science, and has revolutionized the way insurers manage risk.
Hernández detailed the so-called four-box model, which allows analyzing the relationship between threat, exposure, vulnerability, and financial aspects.
He explained that this method is key to evaluating the potential loss of an insured portfolio, designing appropriate reinsurance programs, avoiding risk concentrations, and calculating more realistic technical premiums. He also referred to the importance of correctly interpreting the results of these models, highlighting metrics such as the average annual loss (AAL) and the probable maximum loss (PML).
In his intervention, he warned about the limitations of these tools, as they depend on assumptions and parameters that do not always reflect reality, recalling experiences such as that of Hurricane Maria in Puerto Rico (2017), where, despite complying with regulatory requirements, several local insurers became insolvent.
He emphasized that the use of modeling should be complemented by strategic vision, rigorous supervision, and regulatory policies adapted to the reality of each country.
"All models are imperfect, but when used well, they are essential for building a more resilient and prepared insurance market. They should be a guide for decision-making, but not something to be followed blindly. They must be calibrated to market reality, because it will always vary according to the adjustment of risks, claims culture, among other factors," he concluded.
