PCS targets Korea; forms new exchange
Property Claims Services (PCS), the catastrophe analytics provider, has made two strategic moves: it has made plans to move into the Korean market and will provide a listed cat index for the Cayman Stock Exchange, consolidating traded options for its members.
Following talks with the Korean Fire Protection Association (KFPA) – a not-for-profit disaster prevention institution – the proposed index would provide advantages to actuaries for loss reserving, pricing, segmentation, facility risk transfer, claims and account assessment.
“We were approached by the KFPA following an interest in developing a relevant and accurate index in Korea,” said Joe Louwagie, assistant vice president of PCS.
Louwagie explains that creating the index, which would be highly advantageous to the industry, has not been without complications.
“There are always difficulties along the way,” he said. “We still need to finalise the data contribution and work out whether our existing processes will provide accurate responses, or whether these need adjusting to reflect the Korean market.
“Data submission and language are also factors – as well as various logistical considerations.”
Tom Johansmeyer, director of marketing added: “We carry out extensive market research prior to creating a new index; we don’t create anything on a half-baked idea. We like to think that we’re very fluid with our approach and wait to be told from our market what they want to see – or what they need from us.”
PCS plans to finalise plans and reveal details surrounding the time frame in October.
Meanwhile, its listed cat index on the Cayman Stock Exchange will allow investors access to cat risks and create a unified platform saving time and offering a higher transparency of risks.
“Previously this has not been managed for several reasons, including the lack of cat risks among hedge funds and very little trading volume,” said Johansmeyer. “Today this is a different story.
“The index will bring capital to a single place and create more opportunity to trade. It will also encourage different risk transfers. This year there were several wild fires throughout America. Using the index, we would be able to facilitate that risk transfer.”
Similar to Industry Loss Warranties (ILW), the product would provide an industry loss index and binary options.
“Investors will be able to access a volume of options allowing them to decide whether or not to invest,” said Johansmeyer.