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Original Risk: A Society for Change Agents

Interview: Joe Louwagie, AVP, Property Claim Services (PCS)


The latest in our series of interviews with figures from the risk transfer and insurance-linked securities markets saw us speak with Joe Louwagie, assistant vice president at Property Claim Services® (PCS®), a unit of Verisk Analytics (Nasdaq:VRSK).

We’re lucky to be the first publication or media-outlet to get an interview with Joe, who is the new AVP for the area of PCS which deals with property catastrophe insured loss estimates and provides data for use in the triggers of many industry loss warrants (ILWs) and catastrophe bonds.

With Joe being new to the ILS space, although having a long and distinguished career in the insurance sector with a focus on claims and catastrophe data, we thought it would be interesting to hear his fresh opinion on PCS’ activities in the space and the market itself.

As you’re new to PCS, and now in charge of a data service which is very important to the ILS and cat bond space, perhaps you could start by giving us a little of your background?

Thanks, Steve.  And I appreciate the contributions of Artemis and the knowledge you bring to the ILS community.

I’ve spent the vast majority of my 20 professional years in claims — five as an adjuster and claims technical specialist and then most of the last 15 years managing large departments of claims managers and adjusters. My work predominantly was in property claims, but I’ve also worked with auto physical damage, casualty, and material damage. Most recently, I worked at United Services Automobile Association (USAA), where I spent 11 years. Largely, my time was in claims, although I participated in two developmental job rotations: chief of staff to the property/casualty president and supporting the chief actuary, chief underwriter, and chief product line leaders in a human resources capacity. My prior experience includes The St. Paul Companies and MetLife Home and Auto.

My first experience with the insurance industry came before I got my first claims job. After graduating with a risk management and insurance degree, I joined the U.S. Peace Corps and spent two years in Paraguay working as a small-business consultant and managing a microinsurance project that paid for funeral expenses of participating cooperative members. The program was adopted throughout the entire country and is still in place today.

What experience or knowledge of the ILS, catastrophe bond and alternative reinsurance space did you have in your previous positions with USAA and Metlife?

As a claims professional, I wasn’t involved in the ILS community before I came to PCS, but I was aware of it through my work supporting the USAA actuarial community and its catastrophe risk management department.  What is now fascinating to me is that I have been familiar with PCS for 20 years, but very few people in insurance claims departments have any familiarity at all with ILS or realize the broadened impact of PCS, beyond our core service to the claims community.

Since joining PCS two months ago, I’ve already had several meetings with sponsors, investors, and intermediaries, and we are currently on our second international roadshow since my arrival. Keep in mind that the value PCS brings to the ILS community is claims related. PCS, by definition, is retrospective. We look back at a catastrophe and estimate the actual insured losses based on insurers’ claims experiences. Because of that, the best way we can serve the ILS community is through deep claims knowledge. In fact, the PCS team comes from catastrophe claims backgrounds, and I did a lot of catastrophe work when I was in claims at The St. Paul Companies and as a property claims director with USAA.

So now you’ve had two months to feel at home with PCS and learn about the way it interacts with this market, how do you see the relationship between PCS and the cat bond market today?

Beyond the mechanics of the PCS relationship with the ILS community, what has struck me is the gravity of our role. It’s not lost on me that our clients (and their clients) have considerable amounts of capital at risk. They rely on PCS to develop accurate catastrophe insured loss estimates consistently. I have taken this to heart, which is why I’ve emphasized that our core operations will not change, that any future changes will be developed with customer feedback and communicated thoroughly, and that we remain focused on continual operational improvement.

Too often, I believe, the ILS community sees PCS as ‘the number.’ My goal is for that to change. I’d prefer that the market see PCS as a service — a service to provide that number but to help the community understand the underlying factors in estimating it. Especially with the new investors and sponsors coming into the space, we want people to understand they can come to us with questions about our estimates — and about catastrophe claims in general — and get frank, useful answers.

Is there anything you’d like to implement at PCS to ensure that the services you provide and the relationship you have, with both suppliers and users of the various catastrophe data services, is as healthy as possible?

Absolutely, and I’m glad you asked that question. To start, I’d like to emphasize that PCS has been successful for more than 60 years, and I understand the value of our approach to both the ILS community and insurance industry. We will not change the core operation — aggregating actual claims data to develop estimates of cumulative industry losses. As I mentioned earlier, we take a retrospective approach, using real claims experience. However, there are opportunities for us to strengthen further our relationships with both data suppliers and users.

A frequent theme in my recent interactions with the ILS community is a discussion about how PCS works. In addition to the resources we already provide — from our ‘Everything You Need to Know about the PCS Catastrophe Loss Index’ report to our roadshows —I’m committing to proactive outreach to the market and the inclusion of customer feedback into our operations. We’ll start with “PCS overview” sessions at many home-office insurer locations as well as in Bermuda, London, Zurich, and in other areas where ILS market participants are interested in learning more about PCS. In fact, we’ve already been to Bermuda, and by the time this is posted, we’ll probably be in London after having visited Zurich. And PCS will be at Rendez-Vous again this year.

PCS is committed to helping our clients support their clients. To do this, we’ll provide as much information and insight as we can about our operation and catastrophe claims to help them develop a sense of comfort about what we do. Further, as we implement any changes, we will reach out to our clients for feedback — and give them plenty of notice before any implementation.

So, PCS data is currently used within the trigger of many cat bonds and ILWs. Are you happy with the way this service is provided, and is there anything you are looking to change?

I’m honoured to be part of an entity that has served the ILS community since its inception. PCS has worked well, and for that reason, it’s important before any changes are proposed, however slight, we take a close look at what has worked to ensure we don’t create undue concern. We’ve sought feedback from our clients already and learned of some opportunities for improvement, which we are reviewing, along with a few ideas that I have developed with the PCS team. Again, before we incorporate any significant changes, we want to engage the insurance and ILS communities to seek their feedback and gain their perspectives to ensure there is no adverse impact.

One example is the $25 million threshold for catastrophe designation — and whether it’s time to raise it. However, we understand that raising the level would affect existing ILS transactions, which could disrupt the market. So, one idea would be to review the catastrophe designation threshold annually and then either affirm or announce changes that would be implemented three years later, based on the tenor of most catastrophe bonds. Again, this is a work in progress, but it’s indicative of our thought process and our commitment to use customer feedback in shaping the changes we may make.

In general, I believe it’s important to review operations in any organization, not necessarily to fix something that wasn’t working but to support continual improvement.  We have conducted a number of internal operation reviews already. For example, we’ve looked at the communications we send to the claims departments that supply loss estimate data to PCS to find ways to further improve message clarity and market-share reporting. We are committed to improving the PCS service without disrupting the results our clients rely on every day to manage their risk and capital. And we make it a point to do more than listen — we are fully committed to seeking feedback as often as possible and implementing it where appropriate.

What do you think are the most important things that PCS needs to keep in mind as you look to the future?

One thing stands out for me: I know we will need to earn the right to serve our customers — in both the insurance industry and ILS community — every day. It’s a part of my experience as a claims professional: In that field, the job is to make people whole when they need it most. I’ve taken that perspective with me to PCS, and it is central to how we serve our clients.

Because it’s our job to earn the right to serve our clients, I’m already thinking about how to improve areas where the market has expressed interest, including transparency and consistency — which, along with service, integrity, and reliability, are our core values. Take transparency, for example. While we can never reveal the sources of our information or provide a market-share number that could be used to extrapolate the data source, we do want to be transparent in communicating our processes to encourage a comfort level among our business partners and their clients in working with PCS.

Is there anywhere else you see potential opportunities for PCS in terms of risks or perils covered?

There are, and we assess new opportunities regularly. Rather than seek out a new peril, though, we will reach out to our clients to understand the areas they would like to see new support from PCS. That will help us identify how we can serve them better. Future PCS growth will have to come from meeting the clear needs of our clients.

In fact, the same could be said for international growth. PCS is interested in reaching out to new countries, following our expansion to Canada in 2010. And we’ve evaluated several other opportunities. Our decision to enter a new market, though, will be based on both local market need and interest from the global ILS community.

Do you have any final words on your outlook for the space?

First, thanks again for the opportunity to speak with you and, by extension, the global ILS community. I’d just like to remind the community that PCS exists to serve it, and we will continue to work hard to retain its trust — and for new entrants, earn their trust for the first time. I have a tremendous amount of respect for the effect PCS has had on both the insurance industry and the ILS sector, and I want to make sure both groups know PCS welcomes feedback and perspectives from anyone involved in this business.

I look forward to meeting many participants in this space and encourage anyone who has questions to contact me directly at [email protected].


Our thanks go to Joe for this insight into his thoughts after just a few months with PCS.

Read previous Artemis interviews here. Would you like to be featured in an interview on Artemis? Contact us to discuss.

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