Property Claim Services (PCS), is enhancing its PCS Global Marine & Energy insurance industry loss data aggregation and index service by breaking it down into lines of business, to enhance granularity in reporting and facilitate more focused risk transfer decisions.
PCS launched its service for non-elemental industry loss estimates for the global marine and energy insurance and reinsurance sector, as well as a risk-transfer index to facilitate transactions, back in 2017.
The index was quickly used, with marine and energy industry-loss warranty (ILW) trading seen later that same year.
Now, PCS aims to make the service even more useful to the insurance, reinsurance and insurance-linked securities (ILS) sector, providing greater granularity for insured loss estimates reported under the PCS Global Marine and Energy service, by breaking them down into line-of-business specific buckets.
As of November 1st 2019, PCS will report industry loss estimates for new qualifying marine and energy loss events by class of business, broken down by: physical damage (PD), business interruption (BI), liability, and cargo.
As well as applying this to future marine and energy insurance industry loss events, PCS will also report on this basis for the Jubilee, White Rose, and Lürssen loss events, the company said.
This added granularity will apply to all qualifying PCS Global Marine and Energy loss events of at least US $500 million, with detailed reporting applied to smaller events when it is available.
“In loss aggregation product development, the credit always goes to our collaboration partners first,” according to Tom Johansmeyer, head of PCS. “The effort that our team puts into gathering, understanding, and working with client insured loss data is certainly significant, and our team does fantastic work. However, we always remember what it means for a company to trust you with their data—and to commit to helping you develop a new industrywide solution.”
He further explained that, “Insurers and reinsurers have to expend effort to support a loss-reporting solution. We understand that. So, for us to get support means that we’ve worked on an idea that our clients see as worth their time and is beneficial to them.” Johansmeyer adds, “Our strategy is focused specifically on client needs, and our internal metrics include adoption speed, which we see as a critical indicator of how important a new PCS product is to the market. Ultimately, we’re in this to help our clients succeed. And if we’re helping them, it will work out well for us too.”
“We don’t see any PCS solutions as static,” added Ted Gregory, director of operations, PCS. “For catastrophe and specialty lines loss aggregation platforms alike, we’ve committed to ongoing product enhancements alongside our historical commitment to process improvement. With our 70-year history, it’s easy to look at the longevity of PCS tools and lose sight of the importance of adding new capabilities periodically. We’re more than a growing data set of past losses, and we enjoy showing our clients new ways we can help them.”
Gregory also said, “The increased granularity we’re providing with PCS Global Marine and Energy has been important to us for a while, and we’re excited to bring it to market. Our clients have been looking for class-of-business estimates, and we believe this will help them better understand ocean marine and offshore energy losses.”
PCS has also decided to add a number of historical industry loss events for reference purposes that featured with industry losses ranging from US $100 million to $250 million, which amounts to five additional historical events. The firm said it is not raising the PCS Global Marine and Energy industry loss threshold from US $250 million though, rather adding these smaller losses as an additional service to its clients.
Johansmeyer commented, “We understand the twofold nature of our loss reporting services—as historical reference tools and as triggers for risk transfer. By continuing to research past events and those below our threshold, we find new ways to support our clients in deeper and richer analysis, which ultimately supports better risk and capital management.”
We discussed the expansion of the PCS Global Marine & Energy service with Johansmeyer, to gain a little additional insight for our readers into how the line-of-business granularity came about and can be put to good use in making risk transfer decisions.
Johansmeyer told us how the update to the service came about, “Our latest PCS Global Marine and Energy enhancement comes directly from client requests, It’s exciting to show our clients that we can respond quickly and accurately when they ask for something. It’s why we continue to get the opportunity to collaborate with them on new solutions. In addition to PCS Global Marine and Energy, it was direct client requests that ultimately led to PCS Global Cyber, PCS Japan, and for that matter, all our new solutions launched over the past few years.”
He further explained that the line-of-business granularity should assist in hedging decisions, for reinsurance and retrocessional purposes.
“While there’s been plenty of ILW activity on PCS Global Marine and Energy to date, we understand that more would come if we could provide additional granularity. In order to bring new opportunities to the ILS market, we invested in providing LOB estimates, which we believe should stimulate further risk and capital management opportunity,” Johansmeyer said.
On the subject of adding the smaller historical losses as additional data points in the PCS Global Marine & Energy database service, Johansmeyer explained, “The main reason why we provided the historical reference events below are threshold is that we could. Throughout the data collection process – both during the development of the product and through the post-live monitoring of losses – we found that we learn about a lot more than we cover. With the extra information already in-house, we figured that the extra effort to provide some more information could benefit our clients. We won’t be scouring the market for all losses under US$250 million, but when the opportunity to include them presents itself, we’re happy to provide these reference events (which are below our product threshold) as a courtesy to our clients.”