CAT PLANNING
Weather the Storm
There are plenty of analytical packages available to study flood, quake, or twister risk, but integrating those tools into an underwriting platform made this solution work.
When examining the risk in-volved with natural catastrophes, insurers and reinsurers know full well theyre not about to stop Mother Nature. Software packages to study the risks that arise from such catastrophes never prevented a flood or diverted a hurricane. Still, implementing cat tools has made the job of assigning such risks for insurance carriers far easier than ever before.
ACE Tempest Reinsurance, a Ber-muda-based reinsurer, writes catastrophe reinsurance on a global basis. The companys business model is supported by disciplined underwriting, says Sean Ringsted, chief risk officer at ACE, and he believes the reinsurer must take a quantitative approach to analyze natural catastrophe risk at both the individual and portfolio level. So ACE utilizes a proprietary underwriting and portfolio management platform it calls Heuron for risk assessment, which uses software packages provided by catastrophe modeling companies such as AIR Worldwide as its key analytical tools.
These packages are supplied as separate applications and are not integrated directly into both the underwriting and portfolio workflows, says Ringsted. For a global company such as Tempest, this creates considerable workflow inefficiencies, particularly since the data volumes are large, and presents related issues such as software training, maintenance, and product upgrades.
ACE Tempest already was a customer of AIR Worldwide and familiar with its tools, Ringsted says, so the selection process was simple. We knew the type of solution we wanted from AIR, and it was more a case of adapting AIRs product and software to fit in with our business and technology requirements, he explains.
ACE Tempest implemented CATools from AIR, an application programming interface (API) that offered the reinsurer a component-based solution compatible with any Windows-based underwriting system. It also is offered as a Web services API, connecting to the underwriting platform via the Internet. By integrating the AIR product as a component into our Heuron platform, we aimed to provide an integrated and seamless approach to the use of AIRs analytical tools by our underwriters and analysts, says Ringsted.
The toolset was implemented in January, and the installation was straightforward, since ACE Tempest had done a considerable amount of development work to support the new component. One of the aims of the product was to simplify the user interaction with the analytical tools, and this was borne out by the reduced level of user training that would have accompanied the typical mainstream AIR product release, says Ringsted.
ACE Tempest is pleased with the systems performance thus far. There were some initial performance and tuning issues when we released into production, but these were readily resolved, says Ringsted. Now we are looking to extend the deployment of the product to other areas of the business. The solution has worked out well. The production deployment provides seamless performance of the analysis with the underwriting flow. This was the objective we had hoped to achieve.
The AIR platform uses a Microsoft SQL Server to store data and perform analyses for carriers. We linked this platform to our own databases using software that allows us to transfer the data in native SQL, says Ringsted. The hardware then was tailored to ensure appropriately quick production performance.
The ability to integrate a core analytical process directly into the reinsurers workflow has made this implementation stand out, according to Ringsted. We do not anticipate manpower savings from the deployment, he says. Instead, the deployment will allow our underwriters and analysts to focus less on the running of the software itself and more on the underwriting and risk management consequences of the analysis. ROBERT REGIS HYLE
THE PROBLEM
Global reinsurer needed better workflow for analyzing natural catastrophe risks.
THE COMPANY
ACE Tempest Reinsurance
Web Site: www.acelimited.com
Capital: $1.6 billion
THE SOLUTION
CATools from AIR Worldwide Corp.
Web Site: www.air-worldwide.com
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