Category Archives: RMS(one)

The Transformational Cloud

How does the cloud feature in the transformation plan for your business?

If you are a business leader in your organization, perhaps the “cloud” and your cloud strategy has been something left to the IT professionals who are responsible for managing your IT infrastructure.

But as a business leader, you are responsible for setting the transformation agenda in your organization. Across the board, many (re)insurers take advantage of the opportunities presented by digitalization. From online sales and advanced analytics to the Internet of Things — transformation is inevitable. Your ability to compete and secure future wins depends on how well your organization capitalizes on “big data” to balance speed to market, customer delight, and technology costs. Without the cloud, there is no big data.

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Exceedance 2018: Risk Management. Transformed.

Our sixth Exceedance conference makes a welcome return to Miami, this time at the waterfront InterContinental Hotel on May 14-17, 2018. The views over the Biscayne Bay, inspiring keynotes, over 75 informative sessions, demonstrations, engagement with experts in The Lab, and networking with 700+ industry professionals are all guaranteed. What else can we guarantee at Exceedance 2018? You will leave Miami with a new perspective on risk management, as we invite you to join us for our most transformative and immersive Exceedance yet.

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EXPOSURE Magazine: Essential Insight for Changing Times

I invite you to explore the latest digital edition of EXPOSURE Magazine, which also hit the streets of Monte Carlo as a print edition for those attending Les Rendez-Vous de Septembre, and will be available at RMS events over the coming months.

There is a clear mission for EXPOSURE, which is “… to provide insight and analysis to help insurance and risk professionals innovate, adapt and deliver.” And change is in the air for all businesses in the industry, whether it is developing new opportunities, getting products to market faster, being more agile and efficient, or using data-driven insight to transform decision making.

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Irma: From What Could Happen to What Did Happen…

17:00 UTC Tuesday, September 12

Emily Paterson, director – Model Product Management, RMS

Irma has now dissipated to the relief of many, not least those who experienced the storm’s wrath. The actuality of Irma was not nearly as bad as feared, as discussed in my colleague Tom Sabbatelli’s blog yesterday. Irma’s final path spared the major population centers of Miami and Tampa from the storm’s most damaging winds and storm surge.

Prior to and immediately after landfall, before we could see the final path and the actual impact of Irma, the best that anyone can do is look at the range of possible losses — as the final actual loss can only be known after an event is fully over and the details become clear.

To help our clients understand the potential magnitude of Irma’s insured loss during the storm’s approach, RMS provided guidance around what the distribution of potential wind losses looked like. But although we can have a good level of confidence in potential wind scenarios ahead of time, it is only part of the equation. As the hurricane approaches, we can provide guidance on the risk and identify areas that could be affected by storm surge and flooding, but the distribution of potential losses from these perils is uncertain as these losses are highly sensitive to the nuances of the storm’s final track and wind field structure.

Remember that the Saffir-Simpson scale no longer advises on the expected levels of storm surge following Hurricanes Katrina and Ike — storms that disproved the conventional understanding of the links between a hurricane’s intensity and its storm surge potential.

Now that Irma has gone, observations and imagery have started to come in that reveal the storm’s true impact. We are now able to shift our focus from “what could happen” to “what did happen”, from postulating potential wind loss distributions to delving into the hazard — including storm surge and flood — and damage observations to inform our final reconstructions of the event. Ultimately our understanding of the totality of losses from Irma will account for all loss drivers, including those which were too uncertain to estimate ahead of time. Storm surge, flood and other complicating factors, such as the evacuations, business interruption, and the prolonged and extensive power outages, among others, will all play a part in the final outcome.

While Irma has only dissipated very recently, what is already very clear is that Irma is a very complicated and complex event. How the interplay between wind, storm surge and flood plays out in terms of losses, and adding on top the impact of the complicating factors listed above, will ultimately dictate what the final losses will be.

Wind and surge observations from anemometers and gauges go a long way in helping us to better understand the hazard experienced on the ground, and are crucial as we look to reconstruct the hazard from Irma – our first step to understanding the full loss.

Satellite and drone imagery helps us go one step further and gives us a “birds eye view” of the damage experienced, helping to provide a fuller picture of both the type and level of damage, as well as a good indication of the extent. As we inspect the imagery we are looking for things that will help us refine our understanding of losses from this event — how far inland can we see surge damage? Is there roof damage from winds over a large area? We can use these observations to help refine and validate our understanding of loss. Another advantage of leveraging imagery is that it helps inform where we should focus our field reconnaissance efforts.

Figure 1. Map showing Key West Naval Base with photo image of residential area in the top right corner.  Source: OpenStreetMap

Figure 2: Residential area near Key West Naval Base, pre-event image from Google Earth, post-event aerial image acquired by NOAA on September 11, 2017

Our “boots on the ground” field reconnaissance approach really helps us refine our understanding with more detailed information. Not only does it help validate hazard observations with damage observations, but conversations with home and business owners, as well as those working on the recovery efforts, gives us insight into the prolonged effects impacting the affected communities, such as lengthy closures of businesses and insight into the types of internal and contents damage experienced by homeowners.  Our field reconnaissance plans are already underway and as those field observations come in, they will be fed into our process as well. The more information we have about the damage on the ground, the better our understanding of the full totality of losses from an event will be.

Hurricane Irma: The Exposure Variable

11:00 UTC  Thursday, September 7

Rhett Austell, director – Client Solutions, RMS

In the days leading up to landfall for a major hurricane such as Irma, you will find RMS employees and clients glued to their devices. We are all reading weather blogs, studying RMS HWind snapshots, monitoring Twitter, and sharing each other’s projections and observations on LinkedIn. This is all to get the latest view on a dynamic system – what is the maximum sustained wind? What is the Rmax? Central pressure? What is the integrated kinetic energy?

In such a dynamic situation, it is important to also consider what is static: the concentration of exposure within the hurricane uncertainty cone. In the most general sense, the industry insured loss for such an event is a function of the physical characteristics of the storm and the scale of exposure that is impacted. As has been stated elsewhere on the RMS blog, loss scenarios will vary significantly depending on the concentrations of exposure underlying the event footprint. For hurricanes, a few miles can be the difference between a footnote on a quarterly earnings statement or front page headlines. This was the story last year with Hurricane Matthew after it “wobbled” to the east and spared much of southeast Florida.

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Harvey Shows the Advantage of Cloud Solutions When “Time to Insight” is Crucial

Farhana Alarakhiya, vice president – Products, RMS

Hurricane Harvey continues to be top of mind at the RMS offices. On Wednesday, RMS hosted a client webinar where Mark Powell, Tom Sabbatelli and Pete Dailey discussed how we have applied our methodology developed for the RMS U.S. High Definition (HD) Flood Model to provide insights to the extent and severity of the flooding from Harvey, with Houston as our top priority. This effort has resulted in a high-fidelity hazard inundation map which is now available to all RMS clients.

For clients on the RMS(one)® platform who use Exposure Manager, this effort goes one step further. We automatically seed the Harvey hazard layer in the client tenant, to deliver instantaneous access to analytic insights from the U.S. Inland Flood HD Model.  This models all sources of flooding across space and time, and can also be used to identify and differentiate locations at risk based on flood extent and severity.

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Data Analytics: Fueling the Future of Insurance

Look around and you see the financial services industry being transformed by a newfound ability to tap into a vast amount of data, right at their fingertips. Where business decisions were reliant on intuition and experience, and transactions underpinned by the strength of relationships, data analytics now drives everything from credit rating to complaint handling, from social media-driven marketing to employee performance monitoring.

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Taking Advantage of Open Vulnerability Modeling

Competing in the insurance market through differentiation, and demonstrating knowledge and expertise to a client, are central to so many business strategies in this industry. The client values the insight an insurance business delivers on their exposure which is reflected in their premium. Sometimes, taking the regular model output view of risk is exactly what’s called for. But to demonstrate this differentiated offer, what about a view of risk for a specific class of buildings, or even just one building?

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And the Winner Is….

It’s not as if a great evening at the Ritz-Carlton Coconut Grove in Miami with my peers and colleagues wasn’t special enough, but to collect the prize at the Reactions Latin America awards dinner for “Latin America Risk Modeler of the Year” was very special.  I would like to personally thank the panel of judges who represent some of the leading figures in the region’s insurance and reinsurance market for the award.

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EXPOSURE Magazine Snapshots: A New Way of Learning

This is a taster of an article published by RMS in the second edition of EXPOSURE magazine.  Click here and download your full copy now.

7 Apr 2017 - Machine Learning blog - Exposure banner image 720 x 168

 

In EXPOSURE magazine, we delved into the algorithmic depths of machine learning to better understand the data potential that it offers the insurance industry.  In the article, Peter Hahn, head of predictive analytics at Zurich North America illustrated how pattern recognition sits at the core of current machine learning. How do machines learn?  Peter compares it to how a child is taught to differentiate between similar animals; a machine would “learn” by viewing numerous different pictures of the animals, which are clearly tagged, again and again.

Hahn comments “Over time, the machine intuitively forms a pattern recognition that allows them to tell a tiger from, say, a leopard. You can’t predefine a set of rules to categorize every animal, but through pattern recognition you learn what the differences are.”

Hahn adds that pattern recognition is already a part of how underwriters assess a risk. “A decision-making process will obviously involve traditional, codified analytical processes, but it will also include sophisticated pattern recognition based on their experiences of similar companies operating in similar fields with similar constraints. They essentially know what this type of risk ‘looks like’ intuitively.”

The Potential of Machine Learning

EXPOSURE magazine asked Christos Mitas, vice president of model development at RMS, on how he sees machine learning being used.  Mitas opened the discussion saying “We are now operating in a world where that data is expanding exponentially, and machine learning is one tool that will help us to harness that.”

Here are three areas where Mitas believes machine learning will make an impact:

Cyber Risk Modeling: Mitas adds “Where machine learning can play an important role here is in helping us tackle the complexity of this risk. Being able to collect and digest more effectively the immense volumes of data which have been harvested from numerous online sources and datasets will yield a significant advantage.”

Image Processing: “With developments in machine learning, for example, we might be able to introduce new data sources into our processing capabilities and make it a faster and more automated data management process to access images in the aftermath of a disaster. Further, we might be able to apply machine learning algorithms to analyze building damage post event to support speedier loss assessment processes.”

Natural Language Processing: “Advances here could also help tremendously in claims processing and exposure management,” Mitas adds, “where you have to consume reams of reports, images and facts rather than structured data. That is where algorithms can really deliver a different scale of potential solutions.”

For the full article and more insight for the insurance industry, click here and download your full copy of EXPOSURE magazine now.

For more information on RMS(one)®, a big data and analytics platform built from the ground-up for the insurance industry, and solutions such as Risk Modeler and Exposure Manager, please click here.