AIR Offers Residential Property Assessments for Reinsurance Renewals

AIR Worldwide has announced a new service to assess insurance-to-value (ITV) of U.S. residential property portfolios for reinsurance contract renewals. Available for insurers, reinsurers, and brokers, the service draws upon AIR's expertise in property valuation and its extensive residential property database to estimate the replacement value of properties within a portfolio. A more accurate assessment of insurance-to-value will enable insurers and reinsurers to make better reinsurance decisions and improve their overall catastrophe risk management.

"The challenges insurers face in maintaining up-to-date replacement values are well known in the industry," says Chris Harris, chief underwriting officer at Montpelier Re. "In the past, we have compensated for this bias by applying an industrywide adjustment factor, but the wide range of undervaluation in our cedants' portfolios uncovered by AIR's analysis is leading us to rethink this approach. Moving forward, AIR's ITV analyses will help us better quantify differences in insurance-to-value from cedant to cedant."

Insurers take different approaches to estimating insurance-to-value but often use valuation tools only for underwriting new business. Significant increases in rebuilding costs over time and improvements to individual properties that are not reported may negatively impact the overall ITV of the insurer's portfolio. AIR's ITV analyses allow an insurer to assess the level of underinsurance in its portfolio and to provide evidence of an adequately valued portfolio to a reinsurer.