Lloyd’s Old Library was the setting yesterday for the launch of inhance, a new product designed to close gaps in existing models that continue to expose re/insurers – and companies – to unexpected catastrophe losses.
Insurers still face unplanned and unacceptable levels of risk from natural catastrophes as a result of critical errors and omissions in their property exposure data, according to Gavin Lewis, commercial director for inhance.
“Very significant risk factors, including the precise building location, its use and construction type, and rebuilding value, can be missing or inaccurate in the information an insurer holds,” he explained. “This can lead to unexpected losses and large uncertainties in catastrophe model output which the insurers use for capital allocation.”
ImageCat, a US and London based risk management company, “has spent the last three years working directly with more than 20 London market insurers to develop inhance, a powerful analytics and data platform that allows users to quickly identify incomplete or poor quality data and isolate high risk properties for further improvement and analysis,” said the announcement.
Matt Foote, head of exposure and catastrophe management for Mitsui Sumitomo Insurance Underwriting at Lloyd’s Ltd., London, commented: “Data quality is one of the industry’s most intractable problems, and we welcome initiatives like inhance which help us to isolate unidentified high risk properties and manage our exposures.”
Lewis pointed out that inhance can be used throughout the whole chain of risk management from property owner to securitized risk transfer. He explained that “like insurers, business with large, international property portfolios need tools to identify where the gaps and errors in the data they hold expose them to unacceptable risks from natural catastrophes.
“These businesses may have incomplete or inaccurate data, particularly for property risks which have come through acquisitions of other companies. This means they will not have a complete picture of how they, their suppliers and their transport networks could be affected by a major catastrophic event.”
Inhance incorporates “more than 500 global hazard layers,” which enables “global property owners and insurers to view their sites and properties easily against a range of perils, including earthquake, wind, flood and sea level rise, to gain more precise insight into the levels of exposure across their multinational portfolios.
For the re/insurance industry there are multiple benefits, including the following:
– Greater confidence in catastrophe model output;
– Competitive advantage from improved risk selection and pricing;
– Solvency II compliance for exposure data;
– Enhanced capital allocation process;
– Strengthened reinsurance program planning;
– Improved risk management for other location-specific classes of business, such as fine art, specie, construction energy and cargo;
– Rapid assessment of post catastrophe impacts.
The announcement also noted that “inhance has a unique pricing model in the world of catastrophe risk management. It offers three levels of subscription, including a simple, pay-per-use for corporates and small companies that offers access to global flood, earthquake, windstorm and many other perils, and non-catastrophe datasets from partners such as JBA Risk Management, Kat Risk and Kinetic Analysis Corporation, with more signing up. Inhance will also be compatible with the new non-profit loss modelling framework, Oasis, launched in January this year.”