What is a cat model?

Cat models, short for catastrophe models, are computer-based tools used to assess the potential financial impact of natural and man-made disasters, such as hurricanes, earthquakes, floods, and terrorist attacks. These models are commonly used by insurance and reinsurance companies to estimate potential losses, set premiums, and manage risk exposure. By simulating various disaster scenarios and their likelihood, cat models help organizations make more informed decisions regarding risk management and insurance coverage.