Simplifying Risk Management for an International Reinsurance Terrorism Underwriter
Increasing acts of terrorism have sharply raised risk exposure for reinsurance underwriters. Assessing possible loss in high-risk, high profile regions is key to pricing and managing terrorism coverage. We transformed the client’s outdated risk accumulation methods with our terrorism risk aggregator tool, Terrorism Risk Accumulation and Control (TRAC)—delivering more value with optimized processing, cost-effective business writing, controlled exposure, concise reports, and accurate data-mapping.
About the Client
A leading international re-insurer, the client operates across various geographies in the property treaty, energy, and terrorism classes, with an underwriting capacity of £525-million as of 2010.
The client’s business writing was affected by outmoded risk location-pinning and data-mapping methods that used area codes. Also, process inefficiencies and lack of precise, real-time data on location and details of policy cover across countries slowed operations. This resulted in high costs and inaccurate assessment of clash risks and overall exposure, limiting the ability to exploit business opportunities in high-risk areas. The client approached us to develop an enhanced solution to model and manage their risk coverage. Our fully featured risk aggregation solution with its abilities to map insured risk locations using Google Maps interface allowed the client to easily identify and manage concentrations of risk at the trade level or across an entire portfolio.
The client partnered with us to:
Identify clash risks before underwriting portfolios Report on risk management for the global business Manage risk exposure in high profile areas
Our team transformed process efficiencies for the client’s new terrorism book of business with TRAC, a module of EXACT Advantage—a tool that proactively assesses an underwriter’s susceptibility to catastrophic events.
TRAC optimized detailed reporting and analysis for the client’s terrorism underwriters and brought precision and accuracy to risk assessment and management across geographies. Its integrated Google mapping interface produced exact geographical (X, Y) coordinates for each insured location, allowing the team to generate accurate risk assessments, clashes, and aggregations in real time. In addition, TRAC’s facility of exporting data directly to spread sheets resulted in a quicker and detailed overview of the client’s risk aggregation at multiple levels, generated regulatory reports easily, and kept reinsurers updated on risk exposure by country and risk-type.
TRAC also made it easy for the client to manage risks in high profile areas such as Manhattan and Brussels using “Across the Grid” scenarios for micro analysis of the risk cover. This was accomplished by segmenting each area into a grid comprising circles of 250 meters radius, placed 50 meters apart, which ensured underwriters do not exceed the predefined risk exposure limit for any location on the grid.
Delivering More Value
Our solution integrated processes and streamlined risk aggregation for the client’s terrorism underwriters, simplifying risk management across 169 countries. The benefits to the client included:
More Revenue: We helped maximize the volume of business written in key risk hotspots by accurate and real-time risk assessment. The client could control terrorism risk exposure and divert more capital for underwriting new business.
More Savings: Buying reinsurance became more cost-effective and targeted with access to real-time data on risk accumulation
More Efficiency: The client could leverage the latest Google Map technology through TRAC at minimal cost to map risk locations and policy cover details accurately.