Understanding the Catastrophe Risk Facing Marine Cargo – The World’s Oldest Line of Insurance
From the origins of the shipping container in the 1950s through to nearly ten billion tons of marine cargo carried in 2014, global trade benefits consumers and businesses – but it has also generated tremendous accumulations of cargo, many located in catastrophe-exposed areas.
Methods of measuring cargo risk now fail to accommodate its diversity and complexity: the sheer range of cargo from consumer products to petroleum, the scale of mega-ports handling up to 36m containers per year, and modes of storage from shipping containers to silos.
The RMS Marine Cargo Model provides unprecedented insight into cargo fragility and exposure accumulation, for a unique, granular view of cargo risk across 2,000 combinations of product and storage options covering eighty countries and territories.
The model allows for differentiation of safe compared to vulnerable concentrations of static cargo, to monitor port accumulations of exposure in transit, and to quantify how critical exposure characteristics, such as packaging and salvage potential, contribute to portfolio loss.
A Vulnerability Scheme Tailored to Marine Cargo
Unlike buildings and their contents, marine cargo is not at risk 365 days per year, and its vulnerability depends on specific storage and packaging measures. The vulnerability module within the RMS Marine Cargo Model is the first to explicitly consider these variables, with large volumes of claims data used to calibrate vulnerability curves to provide a definitive and credible view of risk.
Ultra-High Resolution Port Exposure Databases
The world’s largest ports extend for dozens of kilometers, comprising many types of storage structures across varying elevations. RMS developed Industry Exposure Databases (IEDs) to cover defined port areas, with thousands of geocoded structures spanning every major terminal within a port, appropriate for detailed loss modeling of high-gradient perils such as surge and flood.
From Specie to Stock Throughput: Purpose-Built Modeling for a Diverse Line of Business
Cargo policies often carry specific clauses that impact cat loss potential. From accumulation and brand-protection clauses to control of damaged-goods provisions, customize the view of risk within the RMS model to allow the explicit consideration of unique coverages, exposures, and policy provisions.