Our Approach
Marsh takes the following three-step process to identifying and quantifying Nat Cat exposures:
1. Risk Identification
We utilise leading risk-mapping software to analyse how severely, if at all, individual locations/assets are exposed to Nat Cat perils — assessed by means of a risk score. This can be deployed as a standalone analysis, but is often deployed to help refine the focus of consequent Nat Cat risk quantification.
2. Data Collection
Data quality is critical in Nat Cat risk quantification. We collect key information for individual assets from asset schedules and risk survey reports, for overlay in our risk quantification analysis. In addition, we incorporate input from Marsh risk engineers to further enhance the analysis. High quality data leads to less uncertainty in modelled outputs, which in turn can lead to more appropriate loadings for Nat Cat risk within PDBI premiums. We also overlay peril and country/region/location specific deductibles and sub-limits to inform decisions around the appropriateness of existing coverage, or the financial efficiency of alternative programme structures.
3. Risk Quantification
Utilising the very same modelling software used by the majority of (re)insurers, we then model the potential impact and likelihood of a Nat Cat event or series of events. By overlaying an organisation’s existing insurance programme structure with respect to Nat Cat, we then separately present retained, transferred, and any above limit modelled losses at various probability thresholds (e.g. 1 in 100 year losses, 1 in 250 year losses, 1 in 500 year losses, etc.). This enables final decision-making around the appropriateness of existing Nat Cat sub-limits of indemnity.
Value of Nat Cat Modelling
- Identify Nat Cat “hot spots” or high-risk locations within your portfolio, to justify the focus of insurance purchasing decisions.
- Take control of the risk transfer process and enter negotiations with a clear picture of requirements and upper limits and your own accumulation of risk.
- Ability to determine the sufficiency of existing Nat Cat sub-limits of indemnity, or identify any potentially over-insured regions or locations.
- Reduce the likelihood of uninsured losses or narrow the gap between insured and total losses after an event.
- Compare insurers’ pricing to your expected Nat Cat losses.
- Gain the ability to plan ahead and ensure you are prepared for the risks you face from Nat Cat events.
Contact us
For more information on natural catastrophe analytics, contact your local Marsh representative or one of the colleagues below.
