Guy Carpenter launches financial institutions, cyber components of casualty catastrophe modelling platform

Guy Carpenter & Company, LLC has launched new components of its stochastic modelling platform designed to address the liability-based catastrophe risks of cyber/data breaches and financial crisis-type risks.

The new components of the GC ForCas^SM casualty catastrophe modelling platform are meant to help insurance carriers better understand their exposure to casualty catastrophe losses resulting from the accumulation of U.S. commercial lines insurance policies, notes a statement form the global risk and reinsurance specialist and wholly owned subsidiary of Marsh & McLennan Companies.

The data-driven stochastic modelling platform uses a variety of industry sources to anticipate the vast number of scenarios and line of business dependencies.

“The risk from casualty or liability-based catastrophe losses has become increasingly frequent and severe and can have a domino effect where single events cross several lines of business and produce very large losses,” comments John Trace, chief operating officer of U.S. Operations for Guy Carpenter.

The two specific components seek to address risks in a number of industries, Guy Carpenter notes in the statement. Specifically, the financial institutions component is “designed to analyze the effect of casualty catastrophe events originating from financial or similar institutions under the related major insurance lines, including directors & officers, errors & omissions, excess casualty and fidelity,” while cyber attacks “are an emerging risk that have gained worldwide attention and are increasingly impacting a variety of major industries such as healthcare, retail, finance, government and education.”

The cyber component “has been developed to examine first- and third-party cyber risk at the portfolio level,” says Will Garland, U.S. head of specialties at Guy Carpenter. Beyond data breach, other cyber components covered by the model include privacy liability, network security liability, business interruption and data asset protection, Garland reports.

As for the financial institutions component, David Lightfoot, head of GC Analytics, Americas for Guy Carpenter, comments that “financial institutions conduct their business in a highly connected marketplace, so an individual firm’s exposure to systemic industry losses is substantial.”

Guy Carpenter released the first component of the platform this past March. The sudden disaster component addresses losses from casualty catastrophes such as oil rig explosions that can result in billions of dollars in fines, clean-up costs and other compensation burdens, the company statement adds.