Joe LOUWAGIE: In the United States, the trend of the last few years has been an increase in the frequency of catastrophes without necessarily an increase in the extent of the insured loss that has resulted from these events. It's important to categorize the frequency and severity of catastrophes to support the insurance mechanism of pricing accurately for these events and to strengthen the industry knowledge of how to prepare for and respond to them effectively. As climate change continues to impact and distort the ability to predict future event frequency and severity based on a linear view of past events, cataloguing each of these events becomes increasingly important.
XPRIMM: What are PCS core markets and who can benefit from your expertise?
J.L.: PCS has several core markets. We serve insurers in their claims, underwriting, and actuary departments, working closely with these professionals on a daily basis. We also serve the insurance linked securities market which includes insurance and reinsurance companies and ILS funds that use PCS to transfer risk or to invest in this sector. In addition, PCS supports the industry by sharing catastrophe planning and response best practices globally and by bringing world class speakers on catastrophe topics of interest to local markets. Finally, PCS tracks industry trends and disseminates that information to PCS customers.
XPRIMM: Can you explain to us how the PCS industry index is functioning?
J.L.: PCS continually monitors natural and man-made catastrophic events; we look for impacts of sufficient size to warrant a PCS catastrophe designation. This threshold is $25M in the US and Canada and $10M in Turkey. Once we designate an event as a PCS qualifying catastrophe, our team investigates to determine the insured loss resulting from the event. We break down the event into commercial, personal, and auto lines total claim counts and insured loss. This index is used by primary carriers and reinsurers, and it also functions as a globally-accepted, viable and objective trigger to transfer risk.
XPRIMM: PCS has recently expanded to Turkey. What are the main criteria for choosing this market?
J.L.: Our strong partnership with the Istanbul Underwriting Center (IUC) was a pivotal reason in our choice to expand to Turkey. Right from the start, it was clear the mission of PCS to serve the global insurance industry aligned well with the mission of the IUC to serve the Turkish market. From the viewpoints of natural catastrophes and insured losses, Turkey's earthquake and flood exposure as well as its growing market underscore the benefits this market can derive from PCS.
XPRIMM: How did the Turkish market receive the PCS industry index?
J.L.: The reception has been very positive. It is a positive development for the market to have PCS available to put together the insured loss from a catastrophe. In the absence of catastrophes, PCS is actively serving the Turkish market by bringing global speakers on topics of interest to their annual insurance conferences. We are also providing this market with complimentary access to the PCS Benchmarking report series, which surveys the US insurance market on topics related to catastrophe planning and response.
XPRIMM: Do you target other markets from Central and Eastern Europe? Do you also want to launch new products - or focus on nat cat?
J.L.: We are excited about how a PCS partnership with XPRIMM can potentially serve the countries of CEE. While the exposure to natural or man-made catastrophes in CEE is varied, all countries can benefit from receiving industry-leading cat planning and response data and best practices from PCS benchmarking reports. In addition, PCS would foster education and information sharing by bringing speakers from the global market to the CEE through close work with XPRIMM. PCS is also part of a broader company called Verisk Analytics, and there are numerous Verisk solutions that could have great benefit to CEE insurance markets.
XPRIMM: What are your plans for the Romanian markets? Do you think that there is potential?
J.L.: We do think there is potential. Similar to Turkey, there is the ever-present exposure to earthquake. PCS can work with the Romanian market to help prepare the industry for the inevitable event while putting into place a process that will accurately capture the insured loss if an event ever happens. In the meantime, PCS is able to provide services to the Romanian industry without cost in exchange for a commitment to contribute high-level aggregated claims data after PCS qualifying events.
XPRIMM: Verisk has recently launched the first cyber exposure data standard. Why do you consider this to be important for the insurance industry?
J.L.: Cyber risk is a rapidly growing peril, and the ability to analyze cyber risk accurately requires a full understanding of the cyber exposure data. In order to facilitate analysis, companies need to capture this data in a common format that can be used across the insurance value chain. The Verisk cyber exposure data standard is the first step in the process of managing accumulations of cyber risk and will help create a uniform method for data transfer throughout the industry. This exposure data standard is part of ISO Cyber Risk Solutions which offers the tools and support services needed to manage the financial perils of today's digital and connected world.