Terrorism risk management tools help insurers respond

Risk Management Solutions (RMS) has reaffirmed that terrorism risk management products can assist insurers in responding to the terrorism section of the ‘2005 Statement Year Supplemental Rating Questionnaire’ (SRQ), recently issued by rating agency A.M. Best Co.
In December 2005, TRIA was renewed for two years with new terms and limits. In response, RMS has updated the SRQ recommendations to model the new TRIA coverage accurately.
In the questionnaire, A.M. Best requests that insurers indicate whether they utilize a terrorism model to measure their risk, report their largest levels of accumulation, and model their losses for a specific terrorism scenario both inside and outside of key cities.
Similar to prior years, the SRQ asks for results with and without coverage from the federal Terrorism Risk Insurance Act (TRIA).
Functionality delivered through RMS’s RiskLink software which includes comprehensive property and casualty modeling and the analytical capabilities allows companies to perform a wide range of terrorism risk and accumulation analyses required for the SRQ, including:
* Identifying and quantifying multi-line exposure accumulations within specific buildings, using ultra high-resolution data for major urban areas developed in conjunction with The Sanborn Map Company
* Locating a company’s top multi-line exposure accumulations and loss scenarios using a proprietary search algorithm called the RMS Spider technology
* Determining a company’s top multi-line terrorism loss scenarios using the RMS Spider technology
* Calculating exposure accumulations and loss estimates for a full range of financial perspectives, such as gross loss, net loss after reinsurance, and net loss after TRIA recoveries
* Setting up User Defined Cost Severity Schemes (in this case, as defined by A.M. Best)
This is the third consecutive year that the provider of products and services for the management of catastrophe risk SRQ has included multiple questions on terrorism risk.