Catastrophe Modeling Inland Marine Exposures - IMUA
Catastrophe Modeling Inland Marine Exposures - IMUA
Catastrophe Modeling Inland Marine Exposures - IMUA
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What do you think?Have ourModelsgone toofar?Or havethey notgone farenough?2
Map Vs GPSLandmarkA GPS will get you there in themost efficient way but it won'ttell you about othersurrounding options or otherattractions that may beimportant to you. (Touristattractions, landmarks, familyand etc).FamilyFamilyLandmarkLandmarkLandmark5
Quality of address entry in GPS similar todata quality in Cat tools, can the modelrecognize your dataTry entering a Queens address in GPS….too many confusing options21-144 21st Place. Queens, NYWhich 21 st ?21 st St or?You could endup at thewrong location21-144 21 St. Queens, NY6
Cat <strong>Modeling</strong> 1017
Basic Cat <strong>Modeling</strong> MethodologyThe four box model approachHazard Value Distribution VulnerabilityInsuranceConditions• Deductibles• Covers• Shares• Exclusions• …Where, how oftenand how strong?Where, what andcharacteristics?What damagedegree?What is covered?Andy's rule: No naturalcatastrophe model is entirelyapplicable in more than 95% ofall business instances – sometypes of coverage even less so.Many believethat a model isapplicable100% of thetimeOthers are notso sureReallynow?Concern: If we depend too much on models then we may lose ourability to challenge models when we think that the models are wrongSlide 8
Basic Cat <strong>Modeling</strong> MethodologyThe four box model approachValue Distribution• Street address/coordinates of location.• For some perils (flood) this is critical for others less so.• COPE information• Exposure values – Building, Contents, BIWhere andhow? …Gas stations are very vulnerable to wind due to the open structure whereas banks are not as vulnerable. Cat modelsrecognize this but will be fooled by a bank occupancy where the design is more like that of a gas station.Slide 10
Basic Cat <strong>Modeling</strong> MethodologyThe four box model approachVulnerabilityWhat damagedegree?Models use actual claimsdata, when there isenough data.When there is not enough dataexpert opinion is used?Models apply mean damage functions. The scatter plot diagrambelow represents the actual losses to a similarly constructedsingle family home at specific wind fields. At a given wind speedmost of the risks had a loss of under 1% of the exposedstructural value. Nevertheless the range of outcomes wasbetween 0.1% and 50%.50.0Drag line???? Sure Ican do that !??!Slide 11
Basic Cat <strong>Modeling</strong> MethodologyThe four box model approachVulnerabilityStructural versus non-structuralChimneyParapetWhat damagedegree?HVACNon-load bearing Interior wallModels recognize thedifferences in structuresand code years but onlycan make an educatedguess on the nonstructuraldesign.AC UnitFurnitureITElectricalSlide 12
Basic Cat <strong>Modeling</strong> MethodologyThe four box model approachInsuranceConditions• Deductibles• Covers• Shares• Exclusions• …What is $$ covered?Act of GodNegligenceBill of LadingTerms and ConditionsLegal LiabilityCare Custody and ControlRC or ACVValues at RiskLimit or Blanket Limit
Top <strong>Inland</strong> <strong>Marine</strong> Covers• Builders Risk/Installation Floater• Contractor's equipment• Motor Truck Cargo/ Warehouseman's Legal• DIC• EDP• Owned Cargo/Stock through put• Open Lot14
Top <strong>Inland</strong> <strong>Marine</strong> Cover – Builders Risk15
Top <strong>Inland</strong> <strong>Marine</strong> Cover – ContractorsEquipment16
Top <strong>Inland</strong> <strong>Marine</strong> Cover – MTC<strong>Inland</strong> <strong>Marine</strong> is not fixed and the contents vary. As such the hazard anddamageability differs.17
Top <strong>Inland</strong> <strong>Marine</strong> Cover – DICAre all the hazards modeled?18
Top <strong>Inland</strong> <strong>Marine</strong> Cover – EDP19
Top <strong>Inland</strong> <strong>Marine</strong> Cover – StockThroughput and Supply Chain BIUnsure of location, true values, BI, and other items/20
Top <strong>Inland</strong> <strong>Marine</strong> Cover – Open lot21
WindEarthquakeFloodOtherFixedLocationValues attime of lossCOPE InfoSufficientLoss DataEngineeringOpinionStructuralNonStructuralTimeElementFinancialStructureCoverageTermsConditions<strong>Inland</strong> <strong>Marine</strong> ScorecardHow strong is the synergy between model and coverage?HazardValueDistributionVulnerabilityInsuranceConditionsBuilders Risk Installation FloaterContractors EquipmentMTC/WLLDICEDPCargo/Stock Through putOpen LotYYYYY N ? Y N Y ? ? Y ? ? Y ?Y N ? N Y N N ? -- -- ? Y ?Y N ? N N N N ? Y N ? Y NY N ? Y Y Y Y Y Y Y ? Y YY Y N ? Y Y Y Y Y Y Y ? Y YY Y N ? N N N N Y ? ? ? Y ?Y Y N ? Y N Y Y Y -- -- ? Y Y22
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