May 6th, 2009

Visualize, Understand, and Manage Workers Comp Cat Risk with i-aXs®

Posted at 1:00 AM ET

p_sidebar_iaxsEmil Metropoulos, Senior Vice President

Workers compensation risk accumulations can creep up on you. On their own, single insureds may not pose problems. The existence of other risks in your portfolio within the same area can result in disproportionate exposure. A single earthquake, terrorism strike, or industrial accident could trigger substantial insured losses, rapidly depleting capital and impairing company earnings. Of course, this could translate to the destruction of policyholder surplus and shareholder value … particularly since unexpected insured losses are magnified on market capitalization. The i-aXs Workers Compensation data management platform provides a clearer view of workers compensation exposures, enabling targeted portfolio management decisions that can stabilize earnings and protect shareholder value. Equally important, it enables carriers to demonstrate a comprehensive understanding of workers compensation risk to reinsurers, analysts, auditors, and rating agencies.

Data is the fundamental currency of risk management. Access to data — and the tools to manipulate it — can yield the insights necessary to identify troublesome exposures, ascertain appropriate pricing levels, and transfer risk (if necessary). Unlike property data — which tends to be static — employee data is transient and thus more complex. Workers compensation data quality, which has been considerably challenging to obtain in the past, has improved substantially. Yet, even with the increasing availability of this data, most of the tools that could scour it to unlock hidden insights do not allow the flexibility to differentiate and analyze exposures by work shift or maximum any one time (MAOT) employees. Nor do these tools drill down exposure to individual buildings within a large sprawling industrial plant or college campus.

With the previous generation of tools, analysts could spend days to complete an accumulation study of multiple cities. The investment of time effectively deteriorated a company’s return on risk management activities. i-aXs Workers Compensation was built to address the complex data needs and perils specific to this line of business while providing a combined assessment of all property and casualty exposures. By identifying and tracking accumulations at a latitutde/longitude geo-coded level, it is possible to manage risk at a granular level, revealing the actual risks that could lead to the largest losses if a triggering event were to occur. When workers compensation data is not scrutinized and visualized to this degree, more times than not, it tends to result in accumulations and modeled output that is too high and incorrect.

i-aXs Workers Compensation equips insurers to examine their portfolios to ascertain accumulations and take action. With a single address, your data provides the gateway to a wealth of information. The critical differentiation of shift and MAOT is carried out throughout the platform, from various macro views down to each individual site. The Risk Profilerix tool relates a specific location to a specific workers compensation portfolio, resulting in a multidimensional understanding of your exposures — before you bind the risk. Risk characteristics such as distance to a fault line, proximity to terrorism targets, your in-force accumulations around it, average annual loss (AAL), or probable maximum loss (PML) can aid decision-making and ultimately facilitate effective portfolio and capital management.

Source: Guy Carpenter i-aXs®

Source: Guy Carpenter i-aXs®

Apply the right analytics to your data, and you can manage the aggregation of exposures easily. The accumulation reports in i-aXs Workers Compensation illuminates portfolio concentrations from a variety of workers compensation risks — from terrorism to earthquakes to industrial accidents — generating information in both grid and map formats. Report options are versatile and customizable and focus on the risks specific to the workers compensation line of business. Accumulations by industry- or company-defined terrorism targets (by various category types) can be filtered within most major U.S. cities. Other equally desirable portfolio accumulation capabilities — e.g., around hospitals, claims offices, nuclear power plants, and other hazardous industrial facilities — are already available within i-aXs to facilitate a comprehensive understanding of your workers compensation catastrophic risk.

Source: Guy Carpenter i-aXs®

Source: Guy Carpenter i-aXs®

Being able to geo-code a location correctly to the address level impacts not only your ability to underwrite locations, but also insures that the data input into catastrophe models does not skew model output, thereby making them less reliable. Within i-aXs, you can view multiple reports, maps, and satellite images, showing your geo-coding accuracy while identifying and (where necessary) correcting your largest risks’ addresses (in the event of suboptimal results). i-aXs helps improve your address level data resolution which is increasingly looked at by the rating agencies - quickly and efficiently.

RealCatix reports deliver the drill-down capabilities necessary to see which policies in your portfolio would be affected by an event. Workers compensation exposure data allows for a detailed analysis that can streamline the claims management process. Having early access to information can help you monitor an event as it unfolds, ultimately resulting in real-time loss tracking.

The accumulation of workers compensation risk has become more manageable than ever before. Threats to your portfolio — and their implications for shareholders - can be addressed more thoroughly and accurately with i-aXs Workers Compensation, leading to the optimization of capital and improved financial performance. Take charge of your data, and it put it to work. The results will speak for themselves — and on your behalf to your reinsurers, senior management, and rating agencies.

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