EQECAT releases RQE® Version 14, with new features for ILS users

by Artemis on August 16, 2013

Catastrophe risk modelling firm EQECAT released the latest updated version of its risk modelling platform this week. The updated RQE® (Risk Quantification & Engineering) version 14 platform enables EQECAT’s clients, including insurance-linked securities users, to quantify and manage the potential financial impact of natural hazards.

RQE v14 features a number of updates to core features such as country and peril models, the financial model, the platform work flow and improvements to make integration easier. The North Atlantic Hurrricane Model has been updated and this latest version has been Florida Certified for 2013. The German Flood Model now features the ability to create exclusions for highly floodable areas. Another update has been to add workers compensation to the U.S. earthquake model, a feature which may be of interest to ILS users given the issuance in 2011 of a catastrophe bond exposed to workers compensation claims from earthquakes.

An EQECAT representative told us; “With the release of RQE® (Risk Quantification & Engineering) version 14, EQECAT continues to deliver on its multiple-year initiative to enhance our products and offerings, improving overall user experience, and leveraging our robust methodology and unique treatment of uncertainty. RQE v. 14 builds upon the catastrophe modeling and simulation platform introduced in RQE v. 13. Incremental changes have been made to the features and functionality in the platform as part of the RQE v. 14 release.”

There are some upgrades in the platform which ILS and catastrophe bond users will find useful. EQECAT explained the changes to its hurricane model; “The updated North Atlantic Hurricane Model provides the ILS market with improvements in the windfield model to better capture the behavior of fast moving hurricanes, updates to the probabilistic model to capture recent hurricane seasons, and continued support of Florida transactions with continuous certification by the Florida Commission on Hurricane Loss Projection Methodology since its inception.”

The new workers compensation feature within the U.S. quake model could help any potential sponsors of catastrophe bonds similar to 2011’s Golden State Re Ltd. EQECAT explained; “Workers’ compensation has been added as a new sub-peril for USQuake in RQE v. 14. Coverages supported for workers’ compensation are based on the NCCI classification and include death, permanent and temporary total disability, major and minor partial disability, and medical only.”

The changes within the RQE platforms financial model to the Year Loss Table output and ability to apply reinsurance treaties in a ‘Portfolio Aggregator’ will also be relevant to ILS users as well as collateralized reinsurers, ILS funds and others managing portfolios of catastrophe risk.

EQECAT continued; “In addition to these model updates, the RQE v. 14 platform includes two features of direct benefit to the ILS market, both features furthering the already industry leading YLT output format. RQE v. 14 eases the ability to communicate risk on a refined basis by allowing the output of risk descriptions in YLT format at a high level of refinement. The YLT has further been enhanced with the addition of day stamping of all modeled outcomes in the YLT – this allows ILS users of RQE output to perform investigations into seasonal and time sensitive views of risk directly on the YLT output.”

“To create RQE v. 13, we brought together some of the best science, engineering and insurance talent and perspectives from virtually every segment and geography in the global re/insurance industry to gain deeper model insight,” said Dr. Mahmoud Khater, Executive Vice President and Chief Technical Officer. “With the release of RQE v. 14, we are building on a strong foundation for the future. Our goal is to have the RQE platform become the industry benchmark while continuing to bring greater value to our clients.”

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