RMS Cyber Solutions: A New Platform for Managing Cyber Risk

The cyber insurance market is growing. By 2020, the global market is estimated to reach US$5-10 billion and, potentially, US$20 billion by 2025. In just two years since RMS launched our first cyber modeling solution, the RMS Cyber Accumulation Management System, the affirmative market for cyber insurance has increased fourfold. More industry sectors from more countries are buying cyber insurance, but the market remains cautious with only 28 carriers with premiums over US$5 million. How can the market grow safely and capitalize on profitable business?

The new Cyber Risk Outlook report, jointly published by RMS and the Cambridge Centre for Risk Studies, is now available to download. It examines the evolving risk landscape, trends in cyber loss processes, and the state of the cyber insurance market. The report also details how RMS Cyber Solutions Version 3 have added a host of new capabilities for higher-resolution underwriting and probabilistic portfolio risk management, all the way through to new functionality for exposure reporting and accumulation management. Read the report.

GDPR: Don't Let Risk Analytics Fall Behind

The General Data Protection Regulation (GDPR) comes into force across 28 European Union states on May 25 to help EU citizens gain more control with regards to data privacy and protection. But GDPR has significant implications for how the risk management industry handles data. A new white paper, published jointly by RMS and Insurance Day, examines how a lack of clarity around the management of property exposure data under GDPR could see advances in risk analytics go into reverse.

With uncertainty about how location data is categorized, there is a fear that the industry will play it safe and simply aggregate the data to ensure an individual person cannot be identified. This aggregation, wherever it happens in the insurance value chain, will be detrimental to the quality of risk analytics as the industry moves forward to differentiate on risk selection. The white paper calls for a debate within the industry, similar to the experience of the health-care sector, on how to define and manage property exposure data, both to preserve data integrity and granularity and be compliant with GDPR.

Karen White Joins as RMS CEO

RMS welcomed a new chief executive officer on March 1, with Karen White replacing Hemant Shah. Karen is an accomplished leader in the technology industry, having served for more than 25 years as an executive and investor. She has significant experience bringing technology, innovation, data, and operations together to build and scale businesses.

Karen started her career in 1993 as a senior executive at Oracle reporting to CEO Larry Ellison and, among other roles, she led worldwide marketing and business development. During her seven years at Oracle, profits increased nearly 65 times and the market valuation grew to more than US$150 billion. Most recently, she held senior executive positions at SolarWinds, Syncplicity, and Addepar, delivering successful outcomes across all three companies. SolarWinds achieved an IPO in 2009 at a valuation of nearly US$1 billion; Syncplicity was successfully acquired by EMC in 2012; and at Addepar, Karen significantly scaled the customer and partner base for the company's investment management platform to support US$800 billion in total assets, serving some of the world's most important global financial services firms.

On her appointment, Karen commented, “The market for risk analysis, prediction, and management is evolving and dynamic. This is an exciting and important time for RMS. Recent catastrophes have shown that RMS solutions are more important than ever. We have the deepest bench of top talent in the industry and a breadth of products, innovations, and customer relationships that is unmatched.” Read the full announcement.

Providing Earthquake Cover for California's 18.5 Million Workforce

Residential earthquake insurance has around ten percent take-up in California, but nearly all of the 18.5 million employees across the state of California are covered from injuries arising out of and in the course of employment resulting from an earthquake. Whether through an employer’s policy or self-insurance, earthquake cover is not excluded under a workers’ compensation policy. This enormous exposure generates more than US$18 billion in premium each year. But how can the cost of this obligatory, high-risk exposure be measured?

The Workers' Compensation Insurance Rating Bureau of California (WCIRB) recently partnered with RMS to calculate the cost of this risk. Over 400 member companies rely on the work of the nonprofit WCIRB to help accurately measure the cost of providing workers' compensation benefits. In total, the members are responsible for insuring annual business payroll amounting to US$544 billion. RMS used the portfolio provided by the WCIRB, which contained exposure for more than 11 million full-time equivalent employees (including information about each employee's occupation), to create an earthquake analysis using Version 17 of the RMS North America Earthquake Casualty Model. Download the full report and discover how factors such as time of day, exposure distribution, and quality of available data were critical in shaping the result.

How to Build Flexibility in Your Modeling Function

RMS Analytical Services (AS) has racked up 12 years of experience in providing best-in-class cat modeling services, having built a formidable team of 400 professional risk analysts. It has made RMS the largest cat risk operations business co-located globally. The scale and efficiency that AS achieves ensures adherence to high performance metrics for a service offering that is unparalleled within the risk management for insurance industry.

But how do RMS clients use AS? Over 100 clients entrust AS with their business and, in most cases, AS typically operates as an extension to their front and middle offices, but it has the capability to serve the entire cat modeling function. For some clients, AS has entirely replaced their internal cat modeling team.

The range of AS services extends across the function, from preparing and validating exposure data, coding financials, and running models through to underwriting reports, change impact analysis, regulatory compliance, portfolio management, and much more. When working in tandem with in-house modeling teams, AS ensures early adoption to RMS products using the latest RMS IP and maximizes productivity with dynamic, semi-automated, scalable processes and deep industry proficiency. Overall, AS ensures 98 percent of client deliveries are on time, with a 99.7 percent acceptance rate.

With flexibility in the range of services offered comes flexibility in how clients engage with AS. From multiyear managed services contracts to on-demand services for one-off analysis, AS caters to a wide variety of needs, such as on-demand capacity management, new IP adoption, renewal season support, and other bespoke requirements.

For more information on RMS Analytical Services, contact your account representative or go to rms.com.

Learning From Tohoku and Kumamoto: High-Definition Modeling for Japan Earthquake and Tsunami

When the magnitude 9.0 event struck Tohoku in 2011, it was significantly greater in size than expected based on the Japan Seismic Hazard Maps published at the time. Since Tohoku, extensive research projects have been undertaken on the key subduction zones surrounding Japan that drive the seismic hazard and risk. The RMS® Japan Earthquake and Tsunami HD Model incorporates these key research advancements from the latest 2017 Japan Seismic Hazard Maps, as well as leveraging a substantial amount of detailed damage statistics and claims data, and includes the key lessons learned from the Tohoku and Kumamoto events.

This model was built in the RMS earthquake high-definition model framework and features probabilistic tsunami, fire following earthquake, liquefaction, and landslide. As a high-definition model, its simulation-based framework enables tens of thousands of realizations of earthquake losses in a future year. By using a fully probabilistic tsunami model linked with stochastic earthquake events, the model provides a more complete understanding of earthquake risk in Japan. Discover the full benefits of RMS® Japan Earthquake and Tsunami HD Model here.

Moving Forward With Modeling for U.S. Inland Flood

With a renewed focus on flood, especially in the aftermath of Hurricane Harvey and the unprecedented flooding in Houston, the insurance market, government, and property owners are all searching for new solutions to fill the huge protection gap. RMS estimates that more than 20 percent of the contiguous U.S. is susceptible to catastrophic flooding, yet only a fraction of the tens of trillions of dollars of property exposed to flood is covered by the private insurance market.

Due for release this summer, the RMS U.S. Inland Flood HD Model will offer a comprehensive and well-validated view of flood risk throughout the contiguous U.S. This will help (re)insurers gain necessary insights into the commercial opportunities associated with the private flood market. Developed using the latest RMS high-definition simulation methodology, the flood model quantifies the impacts of all sources of precipitation-induced flooding at 19-meter resolution, providing a detailed and robust assessment of inland flood risk across realistic temporal and spatial scales.

With the model directly coupled to the same simulated events as the market-leading RMS North Atlantic Hurricane Model, it also provides insights for how inland flood is spatially and temporally correlated with the two primary hurricane perils, namely storm surge and wind. Ask your RMS account representative about the many new innovations within the model, from the use of 50,000 continuous years of simulated precipitation to modeling of runoff and river discharge, through to estimating damage including the mitigating effects of local defenses, and ultimately to quantify potential losses.

Risk Data Right Where You Need It: RMS Location Intelligence API

Underwriting is a challenging fusion of art and science. Balancing the varied needs of distribution stakeholders while maintaining discipline in pricing and risk selection is pivotal to the success of any insurance business. And it has gotten much harder as rapid automation and comprehensive analytics have arrived on every underwriting desk.

Getting timely, high-quality data into the heart of the underwriting workflow is table stakes for successful underwriting. A growing catalog of catastrophe modeling data is available from RMS that can be integrated directly into underwriting systems using the RMS Location Intelligence API.

By simply providing an address and optional exposure characteristics, RMS delivers hazard, loss cost, and building attribute data straight into an insurer's decision-making engine. Critical information is available through a single API call at real-time speed: from distance to fault, slope, and soil type through to distance to coast, FEMA zone, and flood hazard. Risk scores are available to enable underwriters to segment risk, and loss costs provide instant technical rates for virtually any peril.

To find out more about the RMS Location Intelligence API, contact your account representative.