RMS Launches First-Ever App to Model Cat-in-a-Box Deals
Cloud-based app facilitates a quick and graphical approach to simplify underwriting of parametric contracts
NEWARK, Calif. -
April 07, 2016 -
RMS, the world’s leading catastrophe risk management firm, today announced the release of its new RMS Cat-in-a-Box app. The cloud-based app extends the ability to independently assess and underwrite parametric contracts from a small group of cedant, brokers, and underwriters to all (re)insurers or insurance-linked securities (ILS) funds.
Cat-in-a-Box deals—so called because they provide cover for a particular type of catastrophe in a given geographical “box”—have long been a solution for corporates looking for quick and effective protection, particularly for offshore energy platforms. Until now, a simple, consistent, and transparent methodology to model these transactions has been unavailable to the ILS community.
Stephen Moss, director, capital markets at RMS, said: “The new RMS Cat-in-a Box app makes modeling parametric risk dramatically more straightforward, opening up the opportunity for many more companies to transfer risk on this basis. Not only can users easily define the geographic areas in question, calculating the likelihood of different sized catastrophes is made simple, including the key peril-regions such as hurricane risk in the Gulf of Mexico and North America earthquake.”
With parametric deals, the terms of the contract are triggered by the location and parameters of the catastrophe—for example maximum wind speed or the storm category—rather than losses incurred by it. This means a quick decision can be made on whether a contract is triggered, resulting in a quick payment when it’s most needed, and no need to endure a lengthy claims process.
“With the numerous benefits provided by parametric structures combined with the ability to now better assess the risk using the new RMS Cat-in-a Box app, we fully expect the supply of parametric deals to increase as we approach the start of the 2016 hurricane season.”
The RMS Cat-in-a Box app, which operates on the RMS Miu Insights web platform, uses a simple graphical user interface. Users can adjust the geographic area and change hazard parameters to produce instant key risk metrics and Exceedance Probability (EP) curves.
RMS models and software help financial institutions and public agencies evaluate and manage catastrophe risks throughout the world, promoting resilient societies and a sustainable global economy.