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A new parametric index for estimating insured industry losses from U.S. earthquakes has been launched by Risk Management Solutions (RMS), complementing its existing suite of indices for U.S. hurricanes and Europe windstorms. Paradex U.S. Earthquake combines ground shaking data from U.S. Geological Survey (USGS) ShakeMaps with industry exposure data to calculate insured loss estimates, which can be used to structure and monitor catastrophe bonds, industry loss warranties, and derivative contracts.

Paradex provides insured loss estimates by postal code and line of business for all 50 U.S. states and includes damage from ground shaking, fire following earthquake, and sprinkler leakage. These granular insured loss estimates help issuers to minimize their basis risk, the risk that a security would not sufficiently cover actual losses from an event by tailoring the index to match their exposures and lines of business.

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