Karen Clarke devises hurricane claims risk model for insurers
Specialist catastrophe risk insurer Karen Clark & Company (KCC) has created a system that allows insurers to track potential claims from hurricanes in real-time. The risk model, branded as RiskInsight-lite, is a slimmed-down version of the company's existing catastrophe-modelling platform, and will be operational in time for the approaching Hurricane Irma, which threatens the Caribbean and southeastern United States. It enables clients to build their own scientific models to predict the potential impact of an approaching hurricane, allowing decisions to be taken on buying additional insurance, and mobilising claims teams.

Catastrophe risk modelling specialist Karen Clark & Company (KCC) has launched a new product designed to allow re/insurers to track potential claims and losses from hurricanes in real-time, while allowing them to analyse key exposure metrics.



The live cat (live catastrophe) risk model will help insurance or reinsurance companies and also ILS funds or ILS investors to better understand the potential impacts of approaching hurricanes and developing tropical storm catastrophes.

The new product is being called RiskInsight®-lite, and is essentially a slimmed down version of the KCC RiskInsight catastrophe risk modelling platform, designed to help re/insurers better analyse hurricane exposures in real-time.

As well as providing insights into potential claims and losses from hurricanes in real-time, the RiskInsight-lite platform will also offer re/insurers or ILS users a way to estimate their Exceedence Probability (EP) curves, including probable maximum losses (PMLs) and average annual losses (AALs) at location-level resolution.

KCC said that this product can be made available to users immediately and in time for the approaching major hurricane Irma, which is threatening the Caribbean and U.S. and has recently strengthened into a category 5 storm.

“RiskInsight is an advanced open loss modeling platform that our clients use to build their own scientific models and to customize the Reference Model components such as the damage functions to accurately reflect their actual claims experience,” commented Karen Clark, KCC CEO. “However, some companies haven’t yet licensed RiskInsight because they don’t believe they have the sophistication and/or the resources to fully leverage this powerful new modeling platform. With that in mind, we created RiskInsight-lite to provide only the capabilities of the other cat models plus RiskInsight’s unique real time event tracking capabilities.”

“KCC clients have been pleased and impressed with RiskInsight’s ability to provide accurate real time estimates of how many claims they’re likely to experience and average claim severity by location,” added Christopher Mossey, KCC Vice President of Client Development. “Boards and senior executives expect their modeling experts to quickly provide reliable information, so we’re very pleased to offer RiskInsight’s real time capability to more companies as this highly active hurricane season progresses.”

Having a way to view the potential impact from an approaching hurricane to their underwriting portfolios as early as possible is vital to reinsurance and ILS fund interests.

It can enable decisions to be taken on buying additional protection, such as live cat ILW’s or other products that can hedge a major hurricane impact.

Such insight on approaching storms can also help ILS investors to make trading decisions regarding which catastrophe bonds are most at risk and which they should attempt to sell on the secondary market.

Having access to robust storm analytics can also help re/insurers to make financial decisions, mobilise claims teams and better protect and inform their clients.