risk exposure management made easy for novae ...risk exposure management made easy for novae...
TRANSCRIPT
Managed by Novae Syndicates Limited, a wholly-owned
subsidiary of the Novae Group Plc., Lloyd’s Syndicate
2007 is a dynamic international (re)insurer in the market
with an underwriting capacity of £525-million for the year
ending 2010. The Syndicate’s property treaty, energy and
terrorism classes use NIIT Insurance Technology (NITL)’s
aggregations solutions to manage risk. This case study
elucidates the terrorism book of business’ usage of
Terrorism Risk Accumulation and Control (TRAC)
solution, with its mapping functionality, to manage its
exposure across 169 countries.
When Novae’s Syndicate 2007 began its new book of terrorism
business, finding an effective and accurate way of managing risk
exposure and aggregation was of utmost importance. ‘We realized
that the only way for us to confidently manage our coverage would
be to find a way to get the best idea of our exposure and aggregated
risk,’ says Robert Preston, Novae’s Terrorism Underwriter who
heads the political violence book of business. Outdated methods of
assessing risk accumulation like pinning risk locations on a map or
using postcode-based spreadsheets did not offer the accuracy of
location and policy cover detail. It also lacked processing efficiencies
demanded by Novae, and much of today’s insurance market.
‘The more traditional methods simply wouldn’t work for us if we
wanted to have easily accessible and accurate views of our clash
risks and overall exposure. We take our responsibility to our
reinsurers very seriously. So, we needed to have precise evidence to
prove that we are always managing our risks responsibly,’
comments Robert. In an attempt to meet its risk exposure
management needs, Novae considered catastrophe modeling
systems and risk aggregation tools. Following a thorough evaluation
of the system, Novae chose TRAC, NITL’s terrorism risk aggregation
solution. It was the most cost-effective option that captured full
policy and schedule details. The mapping functionality was also a
determining factor for Novae.
The increasing uncertainty and intensity of man-made disasters has
created unprecedented risk in the underwriting market. High risk
regions present business possibilities to terrorism underwriters that
are not always acceptable due to limited availability of reinsurance
cover; and the nature of terrorism risk makes managing exposure and
pricing a difficult task.
Business Need
Risk Exposure Management Made EasyFor Novae Terrorism Underwriters
Real time decision support targeted on terrorism risks
Leverage Google Map technology and up to date worldwide mapping dataMakes reinsurance cost effective and targeted
Maximize business written within key risk hotspots
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Insurance
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Generating regulatory reports easily:The syndicate’s Realistic Disaster Scenario reports are
automated through TRAC. By providing all schedule data,
reports can be produced with little effort by the
underwriting team.
• Demonstrating responsible risk exposure management
to reinsurers:
The underwriters keep reinsurers posted on their
aggregates every quarter by presenting reports detailing
exposure breakdown by country and by risk type.
• Managing risk exposures in high profile areas:
In high profile areas such as Manhattan and Brussels,
terrorism underwriters can conduct ‘Across the Grid’
scenarios in TRAC. A grid containing multiple 250-metre
radius circles, placed 50 meters apart, is used to analyze
risk cover in the area. By running this scenario, underwriters
ensure that there are no locations in which they have
exceeded the syndicate-defined exposure limit, within a
250-metre radius circle.
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The Solutions
Since the implementation of TRAC in April, 2010, Novae’s
terrorism underwriters have been using the system at the box
for daily routine procedures, as well as for detailed reporting
and analyzing. The most common ways in which the
syndicate’s terrorism class uses TRAC are:
Ensuring pre-underwriting to avoid clash risks
in high profile areas:The terrorism underwriting team is able to make quick
pre-bind checks as a result of TRAC’s integrated Google
mapping interface which generates precise geographical (X, Y)
coordinates for each insured location. The map is used to
pinpoint risk locations at premise level; to show if there are any
clashes within the existing book of business and to assess
opportunities, if any, to underwrite risk at that location. The
ability to get the exact location enables the team to generate
accurate risk assessments, clashes and aggregations in a
matter of minutes.
Reporting to the business on risk exposure
management:TRAC, with its capability of exporting data directly to Excel
spreadsheets, enables underwriters to create concise reports
that can be used to update syndicate management of the
team’s exposure. A variety of reports can be generated by
analyzing the syndicate’s risk aggregation at various levels.
Starting at the highest level, and by the sum of all lines,
countries can be ranked in order of aggregates including zip
code aggregates for the ‘top 10 countries’; the percentage of
the book in each country can also be deduced . This can be
done for each of the different perils covered, including
Terrorism, War on Land and SRCC.
Benefits
TRAC provides these key benefits to terrorism insurance
writing companies:
• Offers competitive advantage with unique, real time decision
support targeted on terrorism risks
• Enables companies to maximize business written within key
risk hotspots and ensures best use of the company capital
• Makes reinsurance cost effective and targeted by having
instant information on risk accumulation
• Leverages Google Map technology and up to date
worldwide mapping data, at minimal cost to the company