RMS, the global risk modelling and analytics firm, has launched RMS RiskAssessor™ 2.0, the re/insurance and insurance-linked securities (ILS) industries’ first “auditable custom vulnerability modeling solution” for hurricane risk.
The new model, which RMS describes as an “engineering-based technology,” has been developed to enable insurers, reinsurers, and also ILS players to integrate their own view of vulnerability into their modelling processes.
RMS RiskAssessor™ 2.0 serves as an open modelling framework, and RMS says users will be able to produce a new “vulnerability risk currency” that can be shared throughout the marketplace.
As well as insurance and reinsurance capital, ILS capacity, via catastrophe bonds and collateralized reinsurance arrangements, often participates in hurricane risk, so the new tool will be a benefit to the alternative markets as well as the more traditional insurance and reinsurance sector.
The new model is designed to enable the risk transfer markets to generate a more “distinct and expansive” view of hurricane risk in real-time, which in turn should lead to enhanced underwriting processes and risk management.
Michael Young, Senior Director, Product Management, RMS, said; “Insurance companies today face an intensely competitive market that requires a more informed approach to pricing and risk differentiation, however, today’s catastrophe models face limitations. Our clients want to distinguish themselves from the pack and with RiskAssessor™ 2.0 they have the opportunity to represent their own unique views to enhance their insights and maximize profits.
“RiskAssessor™ 2.0 brings a fully featured ability to embrace custom vulnerability modeling for the key peril of Atlantic hurricane risk that companies have not had before, and we look forward to expanding this capability to other perils and regions in the near future.”
RMS RiskAssessor™ 2.0 boasts an open vulnerability modeling functionality, which RMS says allows companies to do one of two things:
- Companies that are investing in detailed loss control inspections can turn proprietary inspection data into actionable risk assessments or pricing decisions via the 56 distinct wind-related variables and the RMS virtual wind tunnel technology included in RiskAssessor™ 2.0
- Other companies may choose to take advantage of the flexibility of the custom vulnerability modeling framework to create new classes of risk tuned to their unique business profiles
The ability to create a custom view of risk that can be shared with other risk transfer partners across the marketplace should be beneficial to insurers, reinsurers, and ILS players operating in the hurricane risk arena. Ultimately providing a more comprehensive view of risk and promoting an enhanced underwriting and risk management process.
Furthermore, RMS explains that it allows users to store and share their own vulnerability curves from within the RMS Exposure Data Module.
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