(wire)
RMS unveils new earthquake loss estimator
Risk Management Solutions (RMS) has unveiled a new product intended to estimate insured losses from U.S. earthquakes.
The Paradex U.S. Earthquake is a parametric index that combines data from U.S. Geological Survey ShakeMaps with industry exposure data in order to calculate insured loss estimates. The estimates can then be used to structure and monitor catastrophe bonds, industry loss warranties, and derivative contracts.
In addition, the index enable catastrophe risk to be transferred to capital markets more quickly and transparently, with contracts settled in 40 business days or less, compared with up to a year, RMS said.
According to Peter Nakada, managing director of the RMS dedicated ILS team, Risk Markets, "Paradex offers insurers and reinsurers a straightforward way to transfer earthquake risk based on location-specific ground motion. To date, this approach has only been available through complex parametric cat bonds; now Paradex makes it accessible to simpler structures such as Industry Loss Warranties."
The Paradex U.S. Earthquake is a parametric index that combines data from U.S. Geological Survey ShakeMaps with industry exposure data in order to calculate insured loss estimates. The estimates can then be used to structure and monitor catastrophe bonds, industry loss warranties, and derivative contracts.
In addition, the index enable catastrophe risk to be transferred to capital markets more quickly and transparently, with contracts settled in 40 business days or less, compared with up to a year, RMS said.
According to Peter Nakada, managing director of the RMS dedicated ILS team, Risk Markets, "Paradex offers insurers and reinsurers a straightforward way to transfer earthquake risk based on location-specific ground motion. To date, this approach has only been available through complex parametric cat bonds; now Paradex makes it accessible to simpler structures such as Industry Loss Warranties."
