Praedicat Inc., the Los Angeles-based liability emerging risk analytics company, announced the launch of its new Risk Scenario Analysis Platform, which widens the cross-line clash scope of its scenario suite.
The platform also makes it easier for syndicates at Lloyd’s of London to produce fully compliant reports on six liability scenarios the market has created. These scenarios are: financial product mis-selling (UK); financial market manipulation (US); pharmaceutical product (US); construction product global; chemicals in food (US); and offshore/onshore energy (US).
Praedicat’s new Risk Scenario Analysis Platform allows clients to access a range of emerging risk liability clash scenarios, including COVID-19 liability; PFAS (per- and polyfluoroalkyl substances) drinking water contamination litigation; building product litigation; mobile phones; next generation opioids, and many other “next asbestos” scenarios.
Clients can upload their casualty books into the platform to understand how their casualty business is exposed to these emerging risk scenarios. There also is the functionality to modify assumptions in the software to stress test portfolios against social inflation risk.
“With social inflation driving a surge in mass litigation in the United States, it is more important than ever to monitor aggregations of latent casualty risk. Praedicat’s newly released emerging risk scenario analysis platform can help,” said Robert Reville, Praedicat’s CEO. “We plan to release new scenarios on the platform throughout 2021, including a set of climate liability scenarios later this year.”
In 2021 UK regulators are requiring firms to implement forward-looking risk management frameworks for man-made risk. Praedicat’s new scenario platform directly addresses this requirement, with a robust business focus for emerging casualty risk.
The six liability scenarios were developed with Lloyd’s in response to increasing regulatory focus on how insurance companies are managing their exposure to man-made risks. Lloyd’s will collect syndicates’ responses to the liability scenarios in two periods in 2021.
“Praedicat’s risk scenario analysis platform helps syndicates choose appropriate scenarios to report to Lloyd’s based upon the book that the syndicate writes,” said Lauren Restell, director, Rating & Regulatory Affairs at Praedicat. “Our bottom-up approach goes further to identify company and industry scenario risk drivers, delivering actionable insights to decision makers while simultaneously meeting all of Lloyd’s reporting requirements.”
Praedicat is helping clients generate a Lloyd’s compliant output, requiring provision of basic portfolio information: company name, insurance type (directors & officers, general liability and environmental impartment liability), attachment point, trigger, limit, share and defense cost assumptions. Praedicat’s platform allows syndicates to report Lloyd’s liability scenarios as required – both gross and net of reinsurance – and for all affected jurisdictions and lines as defined by the scenario descriptions.
“Understanding casualty risk to enable effective exposure management is a priority focus area for Lloyd’s in 2021 and beyond. It is great to see new tools being developed to build an emerging risk framework to dynamically identify, monitor and manage future casualty accumulations,” said Kirsten Mitchell-Wallace, head of Portfolio Risk Management at Lloyd’s of London.
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