PERILS unveils ‘first detailed industry exposure database’ for Indonesia, the Philippines and Thailand
PERILS has launched what it understands to be the first detailed industry exposure database (IED) for Indonesia, the Philippines and Thailand.
It will now provide the market-wide property sums insured that are exposed to earthquake, tropical cyclone (typhoon) and flood.
Information for each of the three markets is broken down by CRESTA zone (Catastrophe Risk Evaluation and Standardising Target Accumulations), property line of business and the coverage types of building, contents and business interruption. The conditions for insurance cover, such as the applicable deductibles and loss limits per peril, are included in the database.
PERILS expects the new IED to be used for a range of things including the calculation of market loss-frequency curves using probabilistic cat models and the pricing of industry-loss-based risk transfer products (industry loss warranty, cat bonds). The databases will also support the comparison of modelled market losses with actual market losses for the purpose of model calibration and the detailed benchmarking of portfolio-specific sums insured versus market sums insured.
The independent provider of industry-wide nat cat exposure and event loss data said it had used “a different approach” when sourcing the required data. Following consultations with the insurance sectors in each of the territories, it found that the process of making exposure and loss data available by primary insurers would take some time.
So rather than securing the data directly from insurers, PERILS decided to collaborate with key stakeholders, including reinsurers, brokers and modelers, to establish a consensus on industry exposure levels in the three markets. As a result it collected market sums insured information from these parties. PERILS then thoroughly analysed this data to establish the IED.
Darryl Pidcock, head of PERILS Asia-Pacific, said: "The Southeast Asian region continues to grow in terms of both natural catastrophe exposure and associated losses. PERILS is pleased to be able to provide an industry exposure database for these respective markets which also supports regional government and industry initiatives such as NatCatDAX and ADRIFI. We also plan to engage with the local primary insurers to offer an independent industry loss reporting service. This has the potential to enhance the availability of natural catastrophe risk capital through Insurance Linked Warranties or even Cat Bonds in Indonesia, the Philippines and Thailand as the availability and reliability of exposure and loss data increases.”
Luzi Hitz, CEO of PERILS, added: "The expansion of our territorial scope in the Asia Pacific region to five countries, including Australia and New Zealand, is an important step for PERILS. We are particularly grateful for the strong support from key industry stakeholders in the region which has enabled this. During the process we observed that views of industry-level exposures can vary considerably from one source to another. By our novel approach of evaluating and testing these different market views to come up with a “Consensus IED”, we are convinced that we contribute to a better and more realistic assessment of industry exposures in Indonesia, the Philippines and Thailand. This information is fundamental to understanding catastrophe risk in any market, and it is particularly valuable in these highly catastrophe-exposed Southeast Asian markets."
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