Transcript Slide 1
CDS Convective Offerings Helping Insurers understand their Risk Presented by: Dan Munson Founder, VP of Sales & Marketing CDS Business Mapping, LLC. ©Copyright 2011, CDS Business Mapping, LLC. All Rights Reserved. Product Need Hail Storms and Tornadoes are becoming very expensive to insurance companies Carriers need a way to manage their exposure to hail storms and tornadoes Identifying areas prone to these events is not enough; these are broad areas, but individual storms actually impact very small areas Insurers need to understand where they are most vulnerable 5 Worst Tornadoes of All Time As Ranked by the Weather Channel 1. 1925 Tri-State Tornado 696 people dead; 219 mile path 2. 1974 Super Outbreak 315 dead; 23 F4’s; 6 F5’s 3. 2011 April Outbreak 346 Dead; 4 F5’s 4. 5. 2011 Joplin, MO 1999 Moore, OK News on Losses 2011 Industry Losses ~$7B Allstate $1.4B State Farm $1B+ Travelers $1B American Family $1B Alfa $425-475M CinFin $290M State Auto $75-85M (source: AIR) Historical Data CDS Models based upon data from 1990-Present Early years were underreported • Visual sightings missed events in rural areas • In early 90’s, Doppler radar became widespread • Leads to much higher averages The Bias is Larger with Hail Model Results The model transforms this… Into this… CDS Tornado Model CDS Hail Model Only events with winds >57 MPH were used CDS Straight Line Winds Model MN SD WI MI IA NE NY IL IN OH KS OK TX MO KY TN PA VA NC AR SC MS AL GA LA FL Only events with winds >57 MPH were used NJ DE Policy Concentrations Matter Too We can definitely identify areas susceptible to convective events But that doesn’t take into account the distribution of policies Our new analysis does - It combines the tornado/hail scores with concentration analysis CDS Tornado Model Oklahoma Let’s look specifically at Oklahoma OK Policies Overlaid We then overlay the policies Policies Scored We then ran the policies through the Tornado Model to score each policy. You can see the shading of the points matches the Tornado Model Oklahoma City Policies Scored You can see that the scores for each policy match the tornado scores Close up of Oklahoma City Obviously, there are lots of policies here, with high scores. But where is the largest concentration of policies with high scores? Aggregations 5 mile buffers were created around each policy. The sum total number of “tornado points” around each policy was calculated. So a score of 5 gives 5 points, etc. So its not just counting the policies, its using the scores as well Policies shaded by Total Points You can now see the areas with the highest concentrations and the highest tornado scores Identifying the Highest Risk Areas Highest Risk – 328 Policies within 5 miles; $41m TIV The red policies are the 10 locations with the highest concentrations within a 5 mile radius Closer Zoom Use this information to consider moratoriums and to understand how much capital is at risk Moratorium Example 3 mile buffer around the 10 policies with the highest number of total points. Company could stop writing in this area. Analysis Options This can be done using any or all of the following Sample policy Distribution 800 Count • Tornadoes • Hail storms • Straight line winds 1000 600 400 200 0 0 200 400 600 800 1000 1200 1400 Tornado Points Hail & tornado scores can be customized (size of hail, state specific, etc.) Any radius or multiple radii can be used RMS Convective Modeling RMS Modeling Location YearBuilt:01/01/1971 OccupancyType:37 Stories:4 BuildingClassScheme:RMS OccupancyTypeScheme:ATC BuildingClass:4B2 PercentComplete:100 Coverages Building: 5,000,000.00 Contents: 500,000.00 BI: 500,000.00 Convective Storm Analysis ReturnPeriod:250 PML ReturnPeriod:250 ReturnPeriodDescription:250(0.40%) EpType:OEP LossName:Ground Up Loss Loss:$257,516.00 AAL: $5,399.8 Derivative Products Lists by Zip/County • Average and high scores Size of hail/tornado scale Relative State Scores What else we’re working on Policy Aggregate Module – Track Aggregates in real time Hail Damage Areas – Providing maps immediately after hailstorms for claims to confirm damage Real Time Weather • Hail, hurricane, tornado, etc. Warning areas Tracks Conclusions The CDS Convective Analysis offers a new way to manage hail/tornado risk CDS can identify the specific areas most at risk CDS can quantify the amount of TIV within these areas This gives insurers actionable information to manage capacity and exposure Contact Information If you have any questions, please contact: Amanda Brax Sales Associate 847-246-6666 [email protected]