What could be your exposed limit loss to Major Hurricane Matthew?

Hurricane Matthew is currently moving along the Florida coast with high winds, heavy rain, and a large surge. But as early as three days ago RMS clients were estimating their exposed limit in the path of the storm. How was that analysis generated?

On Thursday October 6 an RMS Exposure Manager analysis of the RMS 2011 Industry Exposure Database (IED) was performed. It found approximately $2.77 trillion of total insured value (TIV) exists within ZIP codes that had a five percent likelihood of experiencing hurricane-force winds – as forecast by the National Hurricane Center (NHC) while the storm was still a long way from the U.S. coast.

Clients were able to feed in insights from the RMS Event Response team to understand the breadth of potential industry losses. Even based on these early forecasts, it was clear this could be a significant event, as you can see from these videos.

Description:  An accumulation analysis is performed against the RMS Wind IED based upon a view of postal codes, as of October 6, that have 5% probability or greater of experiencing hurricane force wind.

But whilst understanding how much the industry is exposed is important to a portfolio manager, understanding how much their own organization could lose is critical. This next video shows how clients used RMS Event Response output on October 6, two days before projected landfall, to quickly produce a range of exposed limit estimates by applying varying damage factors.  With this insight, clients could understand how much exposure they have within the path of the storm using the RMS Financial Model in Exposure Manager.

Description:  An accumulation analysis is performed against an E&S portfolio to calculate exposed limits using various damage ratios based upon a view of postal codes, as of October 6, that have 5% probability or greater of experiencing hurricane force wind.

Description:  An accumulation analysis is performed against an E&S portfolio to calculate exposed limits using a shape file from the National Hurricane Center, which shows areas potentially affected by hurricane force surface winds (1-minute average <= 74mph) banded by probability.

Director, Products - Exposure Manager, RMS
Shaheen Razzaq has more than a decade of experience delivering risk management solutions to both insurance and reinsurance companies. As a Director within the Software Business Unit at RMS, Razzaq has worked with RMS clients to understand their needs for RMS(one)TM the company’s enterprise-class, cloud-based, risk and exposure management platform.
Prior to joining RMS, Razzaq was Risk Aggregations Business Unit Manager at Room Solutions Ltd., and led a department that designs and develops, Exact Advantage, a popular, next-generation offshore energy risk aggregation tool. At Room Solutions Ltd, he then went on manage a global development team that built and successfully implemented several contract and exposure management solutions for large European commercial insurance organizations.
As a regular speaker at industry events, Razzaq often gives presentations about the business-value technology delivers to organizations that manage both catastrophe and non-catastrophe risk. Razzaq holds a master’s in business and information technology from Kingston Business School.

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