Verisk Analytics, the parent company of AIR Worldwide and the Property Claims Services (PCS) brands, has expanded its Verisk Catastrophe Index to include U.S. earthquake risks. When the index was launched in July last year it only covered U.S. hurricane risks but Verisk planned to broaden its coverage to include other perils such as tropical storms, earthquakes, winter storms, wild land fires, severe weather, tornadoes, and hail.
The index provides industry wide insured property loss estimates by country and line of business based on data from PCS and AIR Worldwide. The addition of earthquake risk (which also includes fire following earthquakes) means the index can be used by anyone seeking to transfer two of the most commonly issued catastrophe bond perils in multi-peril transactions.
“Expanding the scope of the Verisk Catastrophe Index beyond the U.S. hurricane peril to include U.S. earthquake risk provides a way for issuers to adopt a common established framework for multiperil risk-transfer transactions,” said David Lalonde, senior vice president at AIR Worldwide.
“PCS industry loss estimates are a long-standing and well-accepted means of transferring risk on a nonindemnity basis,” said Gary Kerney, assistant vice president at PCS. “The Verisk Catastrophe Index provides insurers, reinsurers, and other risk-exposed entities with a standard, PCS-based framework designed to protect their insured exposure at a county and line-of-business level. The Index also allows companies to estimate reserves more accurately, assign finite claims management resources where they are most needed, and increase the precision of their risk-transfer benchmarking by an order of magnitude.”
You can find details of the index on the Verisk website here.