Managed by Novae Syndicates Limited, a wholly-owned

subsidiary of the Novae Group Plc., Lloyd’s Syndicate

2007 is a dynamic international (re)insurer in the market

with an underwriting capacity of £525-million for the year

ending 2010. The Syndicate’s property treaty, energy and

terrorism classes use NIIT Insurance Technology (NITL)’s

aggregations solutions to manage risk. This case study

elucidates the terrorism book of business’ usage of

Terrorism Risk Accumulation and Control (TRAC)

solution, with its mapping functionality, to manage its

exposure across 169 countries.

When Novae’s Syndicate 2007 began its new book of terrorism

business, finding an effective and accurate way of managing risk

exposure and aggregation was of utmost importance. ‘We realized

that the only way for us to confidently manage our coverage would

be to find a way to get the best idea of our exposure and aggregated

risk,’ says Robert Preston, Novae’s Terrorism Underwriter who

heads the political violence book of business. Outdated methods of

assessing risk accumulation like pinning risk locations on a map or

using postcode-based spreadsheets did not offer the accuracy of

location and policy cover detail. It also lacked processing efficiencies

demanded by Novae, and much of today’s insurance market.

‘The more traditional methods simply wouldn’t work for us if we

wanted to have easily accessible and accurate views of our clash

risks and overall exposure. We take our responsibility to our

reinsurers very seriously. So, we needed to have precise evidence to

prove that we are always managing our risks responsibly,’

comments Robert. In an attempt to meet its risk exposure

management needs, Novae considered catastrophe modeling

systems and risk aggregation tools. Following a thorough evaluation

of the system, Novae chose TRAC, NITL’s terrorism risk aggregation

solution. It was the most cost-effective option that captured full

policy and schedule details. The mapping functionality was also a

determining factor for Novae.

The increasing uncertainty and intensity of man-made disasters has

created unprecedented risk in the underwriting market. High risk

regions present business possibilities to terrorism underwriters that

are not always acceptable due to limited availability of reinsurance

cover; and the nature of terrorism risk makes managing exposure and

pricing a difficult task.

Business Need

Risk Exposure Management Made EasyFor Novae Terrorism Underwriters

Real time decision support targeted on terrorism risks

Leverage Google Map technology and up to date worldwide mapping dataMakes reinsurance cost effective and targeted

Maximize business written within key risk hotspots

www.niit-tech.com

Insurance

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Generating regulatory reports easily:The syndicate’s Realistic Disaster Scenario reports are

automated through TRAC. By providing all schedule data,

reports can be produced with little effort by the

underwriting team.

• Demonstrating responsible risk exposure management

to reinsurers:

The underwriters keep reinsurers posted on their

aggregates every quarter by presenting reports detailing

exposure breakdown by country and by risk type.

• Managing risk exposures in high profile areas:

In high profile areas such as Manhattan and Brussels,

terrorism underwriters can conduct ‘Across the Grid’

scenarios in TRAC. A grid containing multiple 250-metre

radius circles, placed 50 meters apart, is used to analyze

risk cover in the area. By running this scenario, underwriters

ensure that there are no locations in which they have

exceeded the syndicate-defined exposure limit, within a

250-metre radius circle.

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The Solutions

Since the implementation of TRAC in April, 2010, Novae’s

terrorism underwriters have been using the system at the box

for daily routine procedures, as well as for detailed reporting

and analyzing. The most common ways in which the

syndicate’s terrorism class uses TRAC are:

Ensuring pre-underwriting to avoid clash risks

in high profile areas:The terrorism underwriting team is able to make quick

pre-bind checks as a result of TRAC’s integrated Google

mapping interface which generates precise geographical (X, Y)

coordinates for each insured location. The map is used to

pinpoint risk locations at premise level; to show if there are any

clashes within the existing book of business and to assess

opportunities, if any, to underwrite risk at that location. The

ability to get the exact location enables the team to generate

accurate risk assessments, clashes and aggregations in a

matter of minutes.

Reporting to the business on risk exposure

management:TRAC, with its capability of exporting data directly to Excel

spreadsheets, enables underwriters to create concise reports

that can be used to update syndicate management of the

team’s exposure. A variety of reports can be generated by

analyzing the syndicate’s risk aggregation at various levels.

Starting at the highest level, and by the sum of all lines,

countries can be ranked in order of aggregates including zip

code aggregates for the ‘top 10 countries’; the percentage of

the book in each country can also be deduced . This can be

done for each of the different perils covered, including

Terrorism, War on Land and SRCC.

Benefits

TRAC provides these key benefits to terrorism insurance

writing companies:

• Offers competitive advantage with unique, real time decision

support targeted on terrorism risks

• Enables companies to maximize business written within key

risk hotspots and ensures best use of the company capital

• Makes reinsurance cost effective and targeted by having

instant information on risk accumulation

• Leverages Google Map technology and up to date

worldwide mapping data, at minimal cost to the company