PCS To Offer Loss Estimates For Terrorism-Related Events

PCS To Offer Loss Estimates For Terrorism-Related Events

The Property Claim Services unit of the Insurance Services Office has expanded its capabilities to include loss estimates for potential catastrophic terrorism losses.

PCS, based in Jersey City, N.J., will assign catastrophe serial numbers to potential terrorism events likely to have caused at least $5 million in insured losses anywhere in the United States, Puerto Rico and the U.S. Virgin Islands. PCS selected a $5 million threshold to coincide with the amount specified by the federal Terrorism Risk Insurance Act.

“Historically, PCS defines a catastrophe as an event causing more than $25 million in losses and affecting a significant number of insurers and policyholders,” said Gary Kerney, assistant vice president in charge of PCS. “To support the U.S. Treasury Department with insured loss data, we are using the lower monetary threshold to designate catastrophic losses for events that may be caused by terrorists.”

The Treasury Department is charged with defining “certified acts” of terrorism under TRIA.

The ISO unit's estimates of claims for potential terrorism acts will include losses for personal and commercial lines (including workers compensation), but the losses will be separately identified. PCS also said it will begin assigning serial numbers to catastrophic workers comp losses “when appropriatewhatever the cause.”

“Our decision to broaden PCS services is a response to two growing uncertainties in the property-casualty insurance marketterrorism and outsized workers compensation losses. We expanded our services to help insurers and reinsurers make sound decisions when developing and activating reinsurance coverage agreements and in planning strategically to deal with these two great threats,” said Mr. Kerney.

Reproduced from National Underwriter Edition, January 20, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.