The RAND Corporation, Risk Management Solutions, Inc. (RMS), andprivate investors launches a company named Praedicat, Inc., thatwill provide consulting services and software to the property &casualty insurance industry.

Praedicat builds off of multi-year research and developmentprojects by RAND and RMS on the identification and prioritizationof emerging risks using modeling and computerscience. Praedicat will have about a dozen employees atlaunch and expects to locate inCulver City,Calif.

RMS is a provider of products and services for the financialmanagement of global catastrophe risk.RANDis a nonprofit publicpolicy research organization. Praedicat marks the first timeRANDhasspun off a new company for commercial application of its technologyresearch.

"The RAND Corporation is committed to pursuing innovative waysto extend the reach of our research and analysis," says Michael D.Rich, president and CEO of RAND. "This new venture willhelp us reach new audiences with solutions and expandRAND'spositive impact on society." 

Praedicat will use new approaches to extend a field of analyticscalled catastrophe risk modeling. These models are used extensivelyby the insurance industry and other financial markets to manage theproperty & casualty risk posed by natural disasters such ashurricanes, earthquakes and terrorist attacks. Praedicatis developing liability catastrophe models to study catastropheswith a human cause for which businesses or people may be heldliable, such as asbestos or climate change. 

"Asbestos had a devastating impact on the workers exposed to it,and it also had a devastating financial impact on insurers," saysRobert T. Reville, a senior economist atRANDwho will be the CEO ofPraedicat. "With the emerging catastrophe risk technologythat RMS and RAND have developed, the casualty insurance industryshould be able to better manage man-made catastrophes while helpingtheir clients avoid them." 

Praedicat tested its solutions with several insurance andreinsurance firms while the technology was under development atRAND and RMS. 

"Modeling has transformed underwriting and catastrophe riskmanagement decision-making for the property insurance market," saidHemant Shah, president and CEO of RMS and a director of Praedicat."RMS and RAND, and now Praedicat, are excited to extend thistransformation to the casualty insurance market, taking it to theleading edge of an industry trend of deeply embedding analytics andmodels to increase risk-adjusted profitability."

James A. Thomson, the former president and CEO ofRAND, willserve as chairman of the Praedicat board ofdirectors. Along with Thomson, Reville and Shah, the boardalso will include Siddhartha Dalal, chief technology officer ofRAND, and Jacques Dubois, a private investor and former chairmanand CEO of Swiss Re America Holding Corporation.