Many of our clients these days are multi-model shops; that is, they use a mosaic of catastrophe models from multiple providers to formulate their view of risk across the different territories in which they operate. For some, this approach enables them to acquire a more complete modeling capability than they could from any one provider. For others, it is a path to exploring uncertainty through multiple perspectives for the same region and peril, sometimes even including blending of results.
While we observe increasing conviction in the market about the importance of being able to access models from multiple providers, we see among our clients an equally strong conviction that they want one – and only one – analytical platform on which to consistently manage their global portfolio. Many want multiple models, but no one wants multiple platforms.
When we architected RMS(one), one of our fundamental design principles was that it had to be both multi-model and model agnostic. To fully deliver on the promise of an enterprise-grade exposure and risk management system, it would have to enable insurers, reinsurers and brokers to run their businesses using whatever combination of proprietary and commercial catastrophe models they chose to use.
Achieving the Promise of a Platform
Today’s desire for access to multiple models is often derailed by the ugly reality of what it takes to actually implement a multi-model strategy. Each model from a new provider requires separate software, and a proliferation of cat modeling software brings an array of costs that far exceed the licensing costs for the models alone: new servers, IT staff to install and maintain systems, user training, new processes, data translation tools and so forth.
We regularly hear from clients that they have declined to license models that would be of value to them because of the costs and operational hassles. And we regularly meet would-be modelers who have no effective way to deliver their models to the insurance industry.
By opening RMS(one) and operating it as a true platform, we enable modelers with established models to deliver them to the global insurance community with the flick of a switch. We enable aspirational modelers with credible engineering and science to implement and make their models available without having to build or even understand insurance financial models, data schemas for complex insurance and reinsurance contracts, or high performance distributed compute architectures. And we enable insurers, reinsurers and brokers to access a rich ecosystem of models with zero frictional costs.
From Competitors to Partners
This journey has challenged us to view our traditional competitors differently. While we will still compete vigorously as modelers, we have found common cause: to deliver a better and more compelling solution to the insurance industry in a way that can be a win for everybody, in particular for our mutual clients. We have collectively achieved a shared understanding of the importance of what is sometimes called “co-opetition” in the modern technology landscape.
To date, we have announced four partners who are implementing their models on RMS(one). The first of these models have now been successfully implemented, proving the versatility of the platform architecture to support models of numerous flavors and underlying technical designs. Partner modelers will also be able to take full advantage of all of the open modeling capabilities of RMS(one), enabling model users to implement proprietary adjustments to the models so that they can operationalize their own view of risk.
We expect to make the first models from Risk Frontiers and ERN available with the release of RMS(one). In fact, the Risk Frontiers Tropical Cyclone model will be available to clients experiencing our final beta release of RMS(one) in coming weeks. It will be the first time in the history of our industry that models from multiple providers can be operated seamlessly on a single platform. JBA’s flood models will follow. And this week we were pleased to welcome Applied Research Associates as our latest partner.
Collectively, these partners are implementing more than 40 probabilistic catastrophe models on RMS(one). Some of these will broaden the range of models available to users beyond the boundaries of the current RMS global model suite, bringing new capabilities for perils as diverse as Australia flood, Mexico hurricane and Thailand flood. Others will provide clients with alternative views of risk for perils ranging from U.S. hurricane to Colombia earthquake.
A Growing Ecosystem
With RMS(one), it is easier than it has ever been to build and deliver new models to the insurance industry. The ecosystem of models on the platform will continue expanding over time, and we expect it to include a growing number of models from new modeling organizations formed to take advantage of the opportunity presented by an open platform.
Insurers and reinsurers will be the ultimate beneficiaries of this increasingly rich ecosystem of models. And as with other major advances in catastrophe modeling in the past, the new capabilities and choices available to them will raise new questions about how to evolve the state of practice, sparking further innovation and collaborative developments to insure catastrophe risk around the world.