Moody’s RMS Announces New Parametric Collaboration with Augment Risk

LONDON / MIAMI, April 3, 2024 - Moody’s RMS™, the leading global catastrophe risk modeling and solutions company, today announced a new collaboration with innovative reinsurance brokerage firm Augment Risk, to develop the market for parametric risk transfer.

With the insurance industry striving to better understand how factors such as extreme weather, climate change, and other natural peril catastrophes impact communities around the world, parametric solutions are increasingly viewed as a realistic and effective alternative to more traditional forms of catastrophe protection.

The collaboration between Moody’s RMS and Augment Risk will help serve a range of clients including large corporates with captives, Lloyd’s syndicates, and insurance-linked securities (ILS) funds who are all looking at the range of benefits that parametric reinsurance solutions can offer.

The collaboration will focus on a cross-section of perils including windstorms, earthquakes, wildfires, and severe convective storms.

Ben Brookes, Managing Director, Moody’s RMS, said: “We believe parametric risk transfer products will play an increasingly important role in managing risk. Parametric risk transfer offers the combined benefits of high transparency and complete risk disclosure, plus the prospect of rapid loss settlement. We look forward to continuing to open up significant market growth by increasing the use of sophisticated risk models and basis risk analytics as enablers.”

Kurt Cripps, Global Head of Parametric at Augment Risk, added: “Working with Moody’s RMS will allow our clients access to some of the most advanced risk analytics capabilities in the world and will develop modeling specifically for parametric reinsurance protections. For index-based solutions to grow as an asset class the modeling must underpin the view of risk from an empirical and stochastic standpoint.”

“Furthermore, demonstrating how the product responds to certain perils is key for achieving solvency benefits for carriers. As this embryonic market establishes itself it is evident that buyers and sellers will require absolute transparency on the index and the actual and projected losses for a given risk.”

“Risk is more extensive and complex than ever before, and this collaboration will allow our partners to make more informed, accurate, efficient, and confident risk management decisions, armed with the latest models that the markets use to assist in pricing parametric risk.

By keeping clients fully informed, we can achieve more consistent prices and help normalize this exciting market. For too long, the parametric market has been on the periphery of the natural catastrophe market. We believe that now is the time for parametric solutions to truly challenge traditional reinsurance buying habits.”

The Moody’s RMS and Augment Risk collaboration will help deliver well-structured, consistent risk transfer submissions to the market, by enabling placements to be syndicated among various capital sources.

Using more detailed modeling, inclusive of industry loss, empirical, and stochastic analysis, should help build greater trust toward developing parametric policies as an alternative to traditional products, and as confidence grows, parametric solutions as a class of business should in turn attract greater investment.

Andrew Matson, CEO of Augment Risk, said: “We are committed to providing bespoke solutions that not only protect our clients but, more importantly, allow them to grow and maximize their enterprise value. For us, this collaboration is an important development as investors seek more accurate and specific modeled outputs.

As one of only a few specialist brokers in this space, Augment Risk is delighted to have parametric solutions as a cornerstone of our execution strategy and this collaboration is further recognition of our absolute determination to build a differentiated and relevant reinsurance broker”.

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About Augment Risk 

Augment Risk is an innovative risk capital and reinsurance solutions broker, focused on designing and placing bespoke protections for a variety of clients. With a wide range of solutions, Augment Risk creates growth and equity value through tailored transactions to deliver long-term capital and partnerships. Augment Risk’s expertise extends beyond reinsurance, allowing the company to disrupt the value chain and build creative, value-accretive solutions for individual client needs. For more information, please visit www.augmentrisk.com. 

About Moody’s RMS

Moody’s RMS shapes the world’s view of risk for insurers, reinsurers, financial services organizations, and the public sector, with Moody’s RMS models underlying the nearly US$2 trillion property and casualty insurance industry. Moody’s RMS empowers organizations to evaluate and manage global risk from natural and man-made catastrophes, including hurricanes, earthquakes, floods, climate change, cyber, and pandemics.

Moody’s RMS helped pioneer the catastrophe risk industry and continues to lead in innovation, unmatched science, technology, and 300+ catastrophe risk models. Organizations can address the risks of tomorrow with the Intelligent Risk Platform™, the only open cloud with collaborative applications and unified analytics that can power risk management excellence.

Further supporting the industry’s transition to modern risk management, in 2020, Moody’s RMS spearheaded the Risk Data Open Standard (RDOS), a modern, open-standard data schema designed to be an extensible and flexible asset within modeling/analysis systems.

In 2021, Moody’s Corporation acquired Risk Management Solutions, Inc. and as part of Moody’s, Moody’s RMS serves the P&C insurance industry as the leading provider of expertise, science, and technology in integrated risk. A trusted solutions partner, Moody’s RMS enables effective risk management for better business decision-making across risk identification and selection, mitigation, underwriting, and portfolio management.

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