Swiss Re Insurance-Linked Fund Management

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PERILS set up to aggregate and distribute European catastrophe loss data


A new joint venture company has been set up to provide aggregation and distribution services for European natural catastrophe loss data. It’s aiming to provide a similar service to the U.S. Property Claims Service. PERILS AG has been set up by a number of European companies who are all equal shareholders in the new venture. Participants are Allianz, AXA, Groupama, Guy Carpenter, Munich Re, PartnerRe, Swiss Re and Zurich.

PERILS AG is going to provide two subscription services to subscribers (subscribers are expected to be mostly insurers, reinsurers, brokers, risk modellers and banks):

  1. Aggregated industry-wide insurance exposure data (insured values), which will be catalogued by risk type and CRESTA zones (defined European geographical zones for natural catastrophe insurance). The data will be provided on an annual basis;
  2. Industry loss estimates per risk type and CRESTA zones, following large natural catastrophe events.

The PERILS initiative will no doubt increase clarity of losses for the insurance community and it’s great to see a European source of data come to light. This will help to improve the understanding of the frequency and severity of losses which impact re/insurers significantly. It’s initially going to focus on European windstorm data but plans to expand to other perils in the future.

However, where this could have the biggest impact to the market is the potential for it to be used as an industry wide index of catastrophe losses to help facilitate the establishment of more accurate and robust loss triggers for both industry loss warranties (ILW), catastrophe bonds and potentially exchange traded products. This announcement should be warmly received by insurance linked securities market participants as it will help them to structure deals more transparently and it will also instill greater confidence in investors that the trigger mechanism is of a high enough standard (particularly important given the financial market issues of late). It will be interesting to see how this initiative progresses!

PERILS aims to be fully operational in the latter half of 2009, focusing initially on Belgium, Denmark, France, Germany, Holland, Ireland, Luxembourg, Switzerland and the UK. Expansion to other European countries is anticipated to follow in 2010.

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