Sompo Canopius, the global specialty re/insurer has partnered with catastrophe modelling firm Risk Management Solutions (RMS) to build what it claims is the world’s first marine cat model.
As joint development partner since 2015, Sompo Canopius has worked with RMS to address limitations to the industry’s ability to effectively quantify man-made and natural catastrophe risk to marine classes.
Sompo Canopius partnered with RMS and six other re/insurers to compile data, and to build and calibrate models to assess vulnerability of cargo and specie more realistically, particularly with respect to product classification, storage and packaging. Significant global exposure accumulations have been studied in detail to improve representation of these key risks with respect to natural and man-made perils.
Marek Shafer, head of catastrophe management at Sompo Canopius, said: “Significant marine losses such as the 2011 Tohoku earthquake, 2012 Hurricane Sandy and the 2015 Tianjin explosion have improved the understanding of the link between property and marine lines of business.
“They have also reinforced Sompo Canopius’s belief that the approach to catastrophe management should be holistic across our group. The practice of square pegging marine exposure into the round holes of property catastrophe risk models is now recognised as inappropriate. A new approach is needed to align these correlated classes and our collaboration with RMS represents a key step on this journey.”
Chris Folkman, director, product management at RMS, added: “Global sea-based trade tonnage nearly quadrupled between 1970 and 2010. With higher cargo volumes, larger ships, growing ports, and increasingly efficient terminal operations, exposures at risk are a growing concern.
"Re/insurers need to have a better grasp of their cargo catastrophe risk and how it correlates with other lines of business. They simply cannot continue to use the outdated methods currently available to them.”
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Sompo Canopius, RMS, Marine cat model, Insurance, Reinsurance, Marek Shafer, Chris Folkman, Europe, North America