Bill Churney is senior vice president at catastrophe modeling firm AIR Worldwide
Will AIR make its models available through RMS(one)?
AIR will not allow its fundamental intellectual property to be uploaded to a platform or cloud operationally controlled by a competitor. AIR is currently delivering on its own strategy to further advance the science of risk management by providing solutions that help the industry truly own the risk.
We believe that the healthy competition that has existed among catastrophe model providers has greatly benefitted our clients, and they appreciate it. It is competition that spurs us to continually advance the sophistication of our models, to extend them to new regions and new perils, to improve the performance and flexibility of our software, and to provide the best service and support. The industry has realized the value of not getting locked into one view of risk. It will not want to be locked into one software provider either.
What is Touchstone?
Touchstone is AIR’s next generation catastrophe modeling platform. The first release became available in January 2013. As of May, more than a dozen companies, among them, major insurers, reinsurers, and reinsurance intermediaries, have deployed Touchstone and our installation schedule remains full. The feedback thus far has been overwhelmingly positive. The performance improvements in Touchstone have been dramatic; our clients have radically reduced the time spent running analyses and are devoting more time to analyzing the results and making better business decisions.
The first release of Touchstone features fully functioning, dedicated modules for assessing and improving data quality, understanding location-level hazard, performing concentration analyses for both modeled and non-modeled countries using advanced GIS and mapping techniques, and performing detailed loss analyses at run times far faster than ever before. Of significant importance for users today, Touchstone is deployable in whatever manner satisfies the needs of our clients—on their premises, in the cloud, or fully integrated with their own business workflows.
What is AIR’s vision for Touchstone?
AIR’s vision for Touchstone and, more generally, for advancing the science of risk management is to provide solutions that help companies truly own their risk. Today, Touchstone allows users to gain a deeper understanding of their exposures and enterprise-wide loss potential, develop insight into the drivers of uncertainty, generate information on demand so that it can be used to make the right business decisions, and communicate the risk in clear language to all stakeholders.
Of course, the first release of Touchstone is just that: the first. For example, AIR’s vision is to go beyond the ownership and management of catastrophe risk. As a member of the Verisk Analytics family, we are in a truly unique position to leverage the vast data stores of ISO and other sister companies to quantify combined catastrophe and non-catastrophe risk on a global basis. We will begin rolling out these capabilities next year.
How is Touchstone different from RMS(one)?
It is important to note that Touchstone is available and being deployed today. RMS’ solution is not yet available, so it is not appropriate for us to speculate about what they are doing.
However, from statements we have read, it is our understanding that RMS is offering only one choice with respect to deployment—on an RMS hosted and managed cloud. AIR is offering our clients choice in how they deploy Touchstone—on their premises, in the cloud, or fully integrated into their own business workflows. Our approach of allowing choice with respect to deployment is receiving tremendous feedback. Clients appreciate not being forced into a technology that may not work for them. Many companies currently have their own internal systems in place that integrate with models, and they want to be able to continue to operate these systems. While some companies are ready to embrace the cloud, the reality is the vast majority are still exploring this new technology and welcome the choice when it comes to critical IT decisions.
By offering companies the choice of how and where they want to deploy their risk analytics—and being open and transparent about the costs and benefits of each option—AIR is helping clients own the risk in a cost-effective manner most appropriate for them today, and partnering directly with them as their needs evolve over time.
Otherwise, our development plan will ensure that Touchstone will exceed or meet the functionality of competing catastrophe risk modeling platforms. We believe that our strategy of broadening the scope of risk management—for example, by offering the ability to manage combined cat and non-cat risk—will lead to a better outcome for our clients. In the meantime, we are continuing to explore technological advances that will enable decision-making in near real time.
Should modelers focus more on software or model development?
Of equal importance to our investment in Touchstone is our continuing investment in our models. We will continue to deliver what our clients have come to expect from us—scientifically-advanced, robust, and stable models that act as the trusted currency for managing and transferring catastrophe risk. This is the core value a modeling company delivers to the industry and one we have delivered on for over 25 years. In fact, we are in the middle of the most ambitious program of model development in the industry including the inclusion of tsunami and liquefaction in our earthquake models and the ongoing work on the highly anticipated US Inland Flood model.