From tool to the new rule – looking at the basics of CAT modeling
For over two decades, Catastrophe (CAT) Models have served as tools for insurance companies to manage their exposures from an aggregation of risks in a catastrophic event. Since their launch in 1987, these models have gone through many updates to further reduce the uncertainty from the previous version’s modeling results. As a result, what was originally developed as an underwriting tool has now become a substantial rule critical to the rating process.
The subject of CAT Modeling has received a fair amount of attention in the world of property insurance, thanks to the release of RMS version 11 last year. The influence it has made to the market via increased rates and increased underwriting discipline has been substantial. Having an understanding of CAT modeling and the recent changes will help to minimize renewal surprises. WGA has released a White Paper to provide a better understanding of CAT Modeling and summarizes the impact of RMS version 11. Our hope is to provide renewal tips to minimize negative effects for a CAT driven property portfolio. We encourage your attention to this your paper and welcome your questions.
About the Author
Mary Broderick is a Senior Vice President and Leader of WGA’s Property Practice. Ms. Broderick is responsible for the design and implementation of complex property insurance programs for WGA’s corporate clients’ and has many years of experience working with complicated Business Interruption (BI) and Contingent Business Interruption (CBI) issues.
617.204.6709 MBroderick@wgains.com Connect with Mary on LinkedIn