PCS launches Turkey historical catastrophe database

Property Claim Services (PCS), a division of Verisk Analytics, has announced the launch of a historical database of industry wide catastrophe loss estimates for Turkey, featuring insured loss estimates for catastrophe and noteworthy non-catastrophe events going back to 1999.

It’s the latest step in the set-up of the PCS Turkey service that PCS announced in May 2015, which will provide catastrophe loss aggregation services and industry loss estimates for events that occur throughout the country.

A number of leading reinsurance brokerages which have a practice specialising in industry-loss warranty (ILW) contracts have signed up to use the PCS Turkey service in recent months, including Alston Gayler and Beach.

The provision of a robust database of historical catastrophe event insurance and reinsurance industry loss estimates is useful to any broker, ceding company or reinsurance and ILS market looking to transact ILW’s exposed to Turkish catastrophe events. The database is also useful to insurance and reinsurance firms operating in Turkey, providing a view of catastrophic event potential and a source of data that can be used to validate risk modelling decisions.

PCS’ historical Turkish catastrophe database has been launched in collaboration with the Istanbul Underwriting Center (IUC). The database is now live and ready for use and it is expected that insurers and reinsurers will make use of the data to improve insurance operations, effect and measure risk transfer, and enhance other post-catastrophe event management practices to more effectively meet the needs of their customers, shareholders, and other stakeholders.

Tom Johansmeyer, assistant vice president of PCS Strategy and Development, commented on the launch; “Our clients have expressed considerable interest in using PCS Turkey catastrophe loss estimates in risk transfer. With the historical database now in place, we’re prepared to help our clients take the next step and complete the transactions they need to improve their risk and capital management for the region.”

PCS Turkey provides data on aggregate insured loss estimates covering five catastrophe events going back to the İzmit and Düzce earthquakes of 1999, including the two 2011 Van earthquakes and the 2009 Marmara flood.

Importantly, the service also offers industry-wide insured loss estimates for three events that did not qualify as PCS-designated catastrophe events, but data on which will still be valuable to the global insurance and reinsurance industry.

Earthquake is unsurprisingly the most frequent catastrophe event type in the data set. But PCS Turkey also covers other natural perils and has an estimate for losses from the 2009 Marmara flood that was a PCS designated catastrophe event, as well as two other flood events that did not meet PCS’ TRY30 million threshold for catastrophe designation.

PCS Turkey will include all future events that meet the catastrophe definition standard, so covering all natural and man-made perils. This could be extremely valuable to the local market, providing rigour and visibility of catastrophe loss events and helping the Turkish insurance industry to better understand the exposure within the country based on event experience.

Additionally, covering all natural and man-made perils will provide broad scope for industry-loss based risk transfer, which could be attractive to global reinsurance firms for retrocession, ILS funds and even insurance companies operating in the region.

Johansmeyer explained; “In Turkey, focusing on the full range of risks, rather than one peril, is the key to a successful loss aggregation platform—for both the historical database and the estimation of future losses. It’s easy to focus just on earthquake or flood, but excluding the other risks that could cause significant losses would still leave the industry exposed. That’s why we deliver on all natural and man-made perils.”

Ted Gregory, director of PCS Operations, added; “With the PCS Turkey historical database, insurers can get a better understanding of the post-event challenges they could face—from claims to actuarial. By setting the threshold for catastrophe definition at TRY30 million, we’re increasing the likelihood that insurers will get more market intelligence on a regular basis.”

Menekşe Uçaroğlu, general manager of IUC, also said; “We’re proud of our collaborative effort with PCS and our most recent achievement. Having spent plenty of years in the Turkish insurance market, I can see immediately the value that disciplined, independent, and broad loss aggregation brings to the Turkish market. While earthquake and flood feature in the database, we’ve already been monitoring the market for both natural and man-made events that could qualify as catastrophes. And when the next event occurs, we’ll be ready to support the Turkish insurance community and its customers.”

Future catastrophe event reports for Turkey from PCS will include industry wide loss estimates for:

• residential: building and contents
• auto: residential and commercial
• commercial: building, contents, and business interruption