January 18th, 2013

RMS Global Probabilistic Terrorism Model

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President

RMS released an updated Probabilistic Terrorism Model (PTM) in July 2012, version 3.1.2. The new model revised the annual frequency of a terrorism attack on U.S. soil. No updates were made to geographies outside the United States.

RMS used a panel of terrorism experts and closely tracked data from the past ten years on terrorist arrests and indications of planned and thwarted attacks. The result of this research was a reduction in the annual number of macro attacks from four to three, implying a 19 percent reduction in average frequency and a 19 percent reduction in the AAL. The reduction in frequency was the only change made to the model. The impact on the AAL is therefore the same across all books of business, but may vary by return period.

In November 2011, RMS updated its U.S. workers’ compensation cost severities to reflect the latest legislation and cost estimates for injury payments. Additional updates to reflect the 2013 environment are expected at the end of 2012.

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