Guy Carpenter & Co. Inc. announced the launch of an enhanced version of CASUS, the industry’s first and only model for analyzing unknown accumulations in workers’ compensation, group life, accident and health insurance portfolios.
The model’s capabilities have been strengthened with the addition of loss components – vulnerability and hazard – that allow insurers to quantify the probable maximum loss (PML) as a result of a specific portfolio’s unknown accumulations. Unknown accumulations may result from a variety of factors such as business travel, attendance at off-site conferences and the natural tendency for certain industries to interact (inter-industry clustering), among others.
“With the latest additions to CASUS’ capabilities, we now have a full suite of modeling and quantitative tools to help clients implement a comprehensive accumulation management strategy. CASUS fills a void in the marketplace and, with the addition of the loss components, allows insurers to gain an even deeper understanding of their potential vulnerabilities and to make more informed risk management decisions regarding their books of business,” said Managing Director Kevin Griffiths, who oversees Guy Carpenter’s Workers’ Compensation, Life and Accident & Health Specialty Practices.
The events of Sept. 11, 2001 made it clear that the potential losses in workers’ comp, group life, accident and health insurance portfolios from a natural or man-made catastrophe could be substantially larger than previously thought. Since then, a great deal of effort has reportedly been put into developing quantitative tools to better understand the possible accumulations in insurers’ portfolios of business.
Today, an insurer can assess with reasonable certainty where people are supposed to be, based on property address. Far more challenging for an insurer to understand is: “Where might people be based on what we should know about travel patterns, inter-industry clustering and other factors?” and “What is the potential impact of those unknown accumulations on my portfolio of business?” CASUS helps to address these questions through rigorous quantitative analysis.
The previous version of CASUS included the accumulation component, which assesses a portfolio’s diversity, or its susceptibility to unknown accumulations. The newly added loss components estimate the likely losses that the unknown accumulations could produce in a given book of business: the vulnerability component identifies key vulnerable areas (conference centers, stadiums and airport terminals) and estimates for a given portfolio the likely insured values in those areas; and, the hazard component converts the likely insured value to an estimate of probable maximum loss against a variety of potential hazards including fire and explosions, earthquakes, biological contamination and major flood incidents.
CASUS, from the Latin word for event or accident, was developed by Guy Carpenter in collaboration with Arium, a U.K.-based specialist in risk analysis and decision support, and is currently available only through Guy Carpenter.