International risk modelling firm RMS has announced the release of version 16.0 of its catastrophe modelling platform, which includes enhancements to its European windstorm and global terrorism models, as well as a new marine cargo & specie model, and new data for U.S. flood risks.
“RMS is bringing a rich pipeline of modeling capability to market this year. Earlier in the year we released our first cyber risk products.
“Now with version 16.0 we have released more new catastrophe modeling capabilities that address long-standing needs for managing marine risk and U.S. flood risk, as well as tackling the uncertainty around Europe windstorm clustering,” said Brian Owens, Senior Director, Model Product Management at RMS.
Artemis discussed the imminent release of RMS’ marine catastrophe model earlier this year; the first of its kind in the global risk transfer industry and that is included in the modeller’s latest release.
The RMS® Marine Cargo & Specie Model includes more than 2,000 vulnerability functions to assess different cargoes and types of storage for a range of perils, including wind, storm surge, and earthquakes across nearly 80 regions, says RMS.
A first for the insurance, reinsurance, and insurance-linked securities (ILS) space, RMS’ marine model is designed to enhance the view of marine risk quantification, strengthening the ability of firms’ marine risk selection, underwriting, and overall management of related exposures.
The model includes a range of exposure datasets and also mapping files for 150 ports across the globe, which should enable more granular, localised marine risk assessment and a better understanding of exposures.
Senior Director, Model Product Management at RMS, Chris Folkman said, “Marine cargo is a crucial part of the global economy, but it has always been treated as an afterthought by the catastrophe models, which until now have used a series of rough approximations to estimate its loss potential.
Larger ships, higher volumes of cargo and expanding ports has heightened exposures in the space, and losses such as the Tianjin, China port explosion highlight just how costly marine events can be for insurance, reinsurance, and increasingly ILS players.
“After a series of large marine cat losses over the past five years, it’s clear the cargo and specie lines need a purpose-built model that captures the diversity of its exposure, the packaging and protection measures taken to protect cargo, and the unique coverages found in cargo contracts,” continued Folkman.
Version 16.0 of RMS’ catastrophe model also includes new flood hazard data for the U.S., which the risk modeller says covers all sources of coastal and inland flooding. The model offers defended and undefended views of flood depth and extent for the return periods 100, 250, and 500-year, at a 30-meter resolution.
U.S. flood risks, while better understood as an exposure than a number of other peril regions, in some parts of the U.S. still lacks adequate coverage penetration, so any advances to models and exposure understanding will likely be welcomed by the industry.
RMS feels the new release will provide insurance, reinsurance, and we’d add ILS players, with an improved insight of the risks, supporting better management, understanding, and ultimately the development of a more profitable flood risk portfolio.
“The data set also reflects the hazard component of the upcoming RMS® U.S. Flood model, which is targeted for release in 2018,” explained RMS.
RMS has also announced updates to its Europe Windstorm Clustering Model, and its terrorism modeling solutions, which includes the RMS® Probabilistic Terrorism Model, and the RMS® Terrorism Scenario Model.
The global risk modeler has added a range of historical datasets and insights into the variability of clustering, and also new and improved analysis capabilities for its European Windstorm Clustering Model.
“This new view of clustering risk provides a more certain view of clustering impacts on losses, informing more effective capacity management throughout the region and support for Solvency II model validation requirements,” says RMS.
The frequency and severity of terror events appear to be on the rise across the globe, with activity in parts of Africa, the U.S., Asia, and Europe driving a need for adequate protection. Owing to its inherent complexities and uncertainties, pricing terrorism coverage can be difficult, but RMS’ updated model aims to improve the understanding of such risks for insurers and reinsurers.
The updates include Paris, France as a newly modeled region, and also improvements of data-driven updates to choose targets, the likelihood of attacks, and “the overall event set across seven countries have been incorporated into all RMS terrorism modeling solutions,” explains the firm.
This should enable an up-to-date view of global terror risks, says RMS, which will improve risk selection accuracy, monitoring and ultimately the pricing of terrorism risks globally.
RMS notes that the new updates and models have been released on RMS RiskBrowser® 16.0 and RiskLink®16.0, which also include software updates to enable the updates and new models to be successfully integrated.