Global catastrophe industry loss index to be created by CRESTA

The CRESTA organisation will soon launch a global industry loss index solution, that will provide insured loss data and event descriptions for natural catastrophe insured loss events around the world.

CRESTA was established by the insurance and reinsurance industry in 1977 as an independent body for the technical management of natural catastrophe insurance.

Now managed by PERILS CRESTA AG, a subsidiary of Zurich-based provider of catastrophe loss data and indices for risk transfer PERILS AG, the organisation has announced the impending launch of the CRESTA Industry Loss Index, or CLIX for short.

The organisation said this morning that it is responding to the insurance and reinsurance industry’s need for better access to natural catastrophe industry loss data.

It sees current sources of natural catastrophe industry loss data as often incomplete, outdated and unstructured, so is launching its own industry loss index.

CLIX will provide structured information on natural catastrophe losses incurred by the global insurance industry, the organisation explained.

Access will be through a database offering insured loss data and detailed event descriptions for all major natural catastrophe loss events dating back to the year 2000.

The organisation said the data base contents will be based on “available information sources,” so it’s not really clear whether the impending launch of CLIX represents an attempt to expand the work PERILS does globally, or not.

But it does seem likely that CRESTA and its manager PERILS might like to see its CLIX data used as a new source of industry loss index data within reinsurance and risk transfer transactions.

Hence, how the data is collected, what exactly “available information sources” refers to, will be key in gaining confidence in the industry that this could perhaps be another trigger input.

Typically, third-party data providers that are used in industry loss transactions collect data directly from industry participants, aggregating it and extrapolating it out to the estimated industry impact.

CRESTA’s CLIX will report on a US $1 billion industry loss threshold with each event analysed closely to establish whether it exceeds this insured loss level and the database will be updated regularly to include new events and new information on past events.

How useful the CRESTA Industry Loss Index will actually be to risk transfer transactions themselves remains to be seen.

But it certainly looks set to be another source of data that proves useful to insurance, reinsurance and insurance-linked securities (ILS) interests, as they establish their appetites for natural catastrophe risk.