catastrophe modeling inland marine exposures · 2012-08-26 · catastrophe modeling inland marine...
TRANSCRIPT
Catastrophe Modeling Inland Marine Exposures Is there a level of synergy between the cat models, the Inland Marine Underwriter, and the Inland marine product lines?
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What do you think?
Have our Models
gone too far?
Or have they not gone far enough?
Table of Contents / Agenda
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Cat Modeling 101 – The four box approach
Top Inland Marine Covers
Top covers and the four box approach – what works and what does not work
The first cat model
Remember when….
Then Now
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Remember when….
Lost
– activity
– interaction
– negotiation
– skill
– health
– doing knowledge
– experience
Gained
– technical skills
– hand dexterity
– PC Skills
– On line skills
– third hand knowledge
– play anytime
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Map Vs GPS
A GPS will get you there in the most efficient way but it won't tell you about other surrounding options or other attractions that may be important to you. (Tourist attractions, landmarks, family and etc).
Landmark
Landmark
Landmark
Landmark
Family
Family
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Quality of address entry in GPS similar to data quality in Cat tools, can the model recognize your data
21-144 21st Place. Queens, NY
21-144 21 St. Queens, NY
Try entering a Queens address in GPS….too many confusing options
21 st St or?
Which 21st ? You could end
up at the wrong location
Cat Modeling 101
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Slide 8
Basic Cat Modeling Methodology The four box model approach
Hazard Value Distribution Vulnerability Insurance Conditions
Where, how often and how strong?
What damage degree? What is covered?
• Deductibles • Covers • Shares • Exclusions • …
Where, what and characteristics?
Andy's rule: No natural catastrophe model is entirely
applicable in more than 95% of all business instances – some types of coverage even less so.
Many believe that a model is
applicable 100% of the
time
Others are not so sure
Really now?
Concern: If we depend too much on models then we may lose our ability to challenge models when we think that the models are wrong
Slide 9
Basic Cat Modeling Methodology The four box model approach
Hazard
Where, how often and how strong?
Hurricane – Very good understanding of the hazard, severity and frequency although opinions may differ on wind filling and current climate views.
Earthquake also generally good although some concern about extreme magnitude, liquefaction, and models inability to recognize higher frequency of after shocks. Very weak in Tsunami assessment.
Tornado – Difficult to model severity and track possibility of missing or hitting
Flood – Zones identified but events not modeled by most modelers
Brush fire – Zones identified but frequency highly dependent on prior year's weather patterns.
Other hazards missing.
Slide 10
Basic Cat Modeling Methodology The four box model approach
Street address/coordinates of location.
For some perils (flood) this is critical for others less so.
COPE information
Exposure values – Building, Contents, BI
Value Distribution
Where and how? …
Gas stations are very vulnerable to wind due to the open structure whereas banks are not as vulnerable. Cat models recognize this but will be fooled by a bank occupancy where the design is more like that of a gas station.
Slide 11
50.0
Models apply mean damage functions. The scatter plot diagram below represents the actual losses to a similarly constructed single family home at specific wind fields. At a given wind speed most of the risks had a loss of under 1% of the exposed structural value. Nevertheless the range of outcomes was between 0.1% and 50%.
Vulnerability
What damage degree?
Basic Cat Modeling Methodology The four box model approach
Models use actual claims data, when there is
enough data. When there is not enough data
expert opinion is used?
Drag line???? Sure I can do that !??!
Slide 12
Vulnerability
What damage degree?
Basic Cat Modeling Methodology The four box model approach
Structural versus non-structural
Models recognize the differences in structures and code years but only can make an educated
guess on the non-structural design.
HVAC
Parapet
Chimney
Non-load bearing Interior wall
Furniture
Electrical
IT
AC Unit
Basic Cat Modeling Methodology The four box model approach
Insurance Conditions
What is $$ covered?
• Deductibles • Covers • Shares • Exclusions • …
Act of God Negligence
Bill of Lading Terms and Conditions
Legal Liability Care Custody and Control
RC or ACV Values at Risk
Limit or Blanket Limit
Builders Risk/Installation Floater
Contractor's equipment
Motor Truck Cargo/ Warehouseman's Legal
DIC
EDP
Owned Cargo/Stock through put
Open Lot
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Top Inland Marine Covers
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Top Inland Marine Cover – Builders Risk
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Top Inland Marine Cover – Contractors Equipment
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Top Inland Marine Cover – MTC
Inland Marine is not fixed and the contents vary. As such the hazard and
damageability differs.
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Top Inland Marine Cover – DIC
Are all the hazards modeled?
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Top Inland Marine Cover – EDP
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Top Inland Marine Cover – Stock Throughput and Supply Chain BI
Unsure of location, true values, BI, and other items/
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Top Inland Marine Cover – Open lot
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Inland Marine Scorecard
Builders Risk Installation Floater Contractors Equipment MTC/WLL DIC EDP Cargo/Stock Through put Open Lot
Hazard Value Distribution
Vulnerability Insurance Conditions
Win
d
Ea
rth
qu
ake
Flo
od
Oth
er
Fix
ed
Lo
ca
tio
n
Va
lue
s a
t ti
me
of
loss
CO
PE
In
fo
Su
ffic
ien
t Lo
ss D
ata
En
gin
ee
rin
g
Op
inio
n
Str
uctu
ral
No
n
Str
uctu
ral
Tim
e
Ele
me
nt
Fin
an
cia
l S
tru
ctu
re
Co
vera
ge
Te
rms
Co
nd
itio
ns
Y Y N ? Y Y Y Y Y Y Y ? Y Y
Y N Y ? Y N Y ? ? Y Y ? ? ?
Y N Y ? N Y N N ? -- -- ? Y ?
Y N Y ? Y Y Y Y Y Y Y ? Y Y
Y Y N ? N N N N Y ? ? ? Y ?
Y N Y ? Y N Y Y Y -- -- ? Y Y
Y N Y ? N N N N ? Y N ? Y N
How strong is the synergy between model and coverage?
Thank you