Former entrepreneur in China, now a PhD Candidate at NHH
`My academic journey has been a bit of a global one, Xiaoguang Wu says.
More rain, greater risk – do current models fail to keep up?
Yue Shi has studied how rainfall affects home insurance. She finds increasing risk over time, significant geographical differences – and a clear need for new thinking as the climate gets wetter.
AS PART OF OUR PHD SERIES INTRODUCING CANDIDATES AT NHH, MEET YUE SHI!
Name: Yue Shi
From: China
Department: Department of Business and Management Science
Research interest: Statistics, management insurance, climate risk
Started: 2020
Main supervisor: Associate Professor Håkon Otneim
Bergen set a new rainfall record in August 2024, with 475 mm falling during that single summer month. On just one day in October last year, the city saw more than 100 mm of rain.
And there’s more to come — climate scientists estimate an increase of around four percent in the years ahead.
Doctoral thesis
So how do extreme rainfall and climate-related events affect home insurance claims?
That’s the central question of Yue Shi’s doctoral thesis at the Department of Business and Management Science.
The analysis reveals a clear upward trend in the risk of weather-related water damage in Bergen between 1958 and 2021, while no significant trend is observed for Oslo.
`Climate change has posed significant challenges to socioeconomic systems worldwide, and the insurance industry is at the forefront of responding to climate risks´, says Yue Shi.
She is involved in the research project Climate Futures. Climate Futures, funded by the Research Council of Norway. This is a centre for research-driven innovation where researchers work closely with industry partners to solve problems related to climate risk.
Shi will defend her thesis at NHH on April 24.
Heavy rainfall in urban areas
Using advanced statistical models and high-resolution
weather data, Shi documents a clear increase in both the frequency and severity of water-related damage over time.
From NHH to a prestigious postdoc in economics
PhD candidate Paula Navarro Sarmiento has secured a postdoctoral position at CEMFI in Madrid, one of Europe’s top research institutes in economics.
`Damage caused by extreme rainfall is becoming more frequent and more severe, especially in urban areas with impermeable surfaces and poor drainage systems. My results show that today’s insurance models often don’t capture how risk is evolving, ´ she explains.
Her dissertation consists of three research papers, all centered on the growing challenges of extreme weather, especially cloudbursts — pose to the insurance industry and society more broadly.
Large regional differences
`You’ve already had one paper accepted i a top 10% journal?´
`Yes, and the first paper, on the dependence between extreme rainfall and extreme insurance claims, has been accepted for publication in the journal Risk Analysis.
Shi uses data from Tryg Insurance and the Norwegian Meteorological Institute. She identifies which types of rainfall are most strongly associated with severe claims.
`It’s not just the total amount of rain that matters. The intensity and how quickly the rain falls are more important. And this varies by location. In Oslo, total rainfall plays a bigger role, while in Bergen, short and intense rain events are more damaging, ´ says Shi.
This type of knowledge can help insurers price risk more accurately — and support better local climate adaptation.
Models uncover trends
In the second paper, Shi analyzes how insurance claims evolve over time.
Publications
The first paper in her thesis, entitled "Assessing the dependence between extreme rainfall and extreme insurance claims: A bivariate POT method" has been accepted for publication in Risk Analysis, which is on level 4 in the ABS list (Top 10% in the world).
The second paper (co-authored with Antonio Punzo, Håkon Otneim and Antonello Maruotti), "Hidden semi-Markov models for rainfall-related insurance claims" is published in Insurance: Mathematics and Economics, which in on ABS level 3 (Top 40%).
`Many of today’s insurance models lack climate change considerations. Our research highlights the urgency for insurers to continuously monitor weather-related risks in their operational practices and strategic planning. Climate risk is non-negligible, and both insurers and policymakers need to take that into account, ´ she says.
The research contributes to the broader understanding of climate risk in the insurance industry and supports the development of resilient and sustainable insurance practices.
Insights into the insurance industry
Shi’s final paper explores how insurers can use this knowledge to better prepare for increasing climate risk — before the next storm hits.
The study captures a wide spectrum of weather-induced impacts, ranging from localized incidents caused by intense rainfall to large-scale events such as storms.
`By identifying which weather conditions have historically caused damage, we can better predict high-risk situations in the future. That provides a stronger basis for fairer and more forward-looking insurance pricing´.
Her research offers several concrete recommendations for the insurance sector. One key takeaway is the need for more differentiated, data-driven risk assessments.
Kajuna ’ s interest in circular business innovation brought him to NHH
Jovinary Kajuna has studied banking and finance in Dar es Salaam and completed a master's degree in Kristiansand. The 28-year-old from Tanzania is now a PhD research fellow at NHH.
`Insurers should consider adjusting premiums based on local weather history and seasonal variation. Climate-related risk isn’t the same everywhere, and the timing of adjustments also matters, says the PhD Candidate.
By combining historical weather data with claims data, insurers can build more accurate risk models. The study shows that late summer is the best time for making precise adjustments, as climate models tend to offer clearer signals about high-risk periods.
`This isn’t just about reacting after the fact, ´ Shi says. `It’s about using the data we already have to stay ahead of the risk. ´
The translator from Colombia
With a decade of translation experience, PhD Candidate Claudia E. Zapata Urrego dives into new research at NHH, exploring the future of human involvement in translation.