Guy Carpenter & Company, Inc., the risk and reinsurance specialist of Marsh & McLennan, has unveiled its new Agricultural Risks Exposures (ERA) model for Italy’s hail insurance market.
“The ERA model was designed to improve risk evaluation for reinsurance treaties in the increasingly risk-diversified Italian crop hail market for property insurers,” said the bulletin. “ERA aggregates and analyzes information on crop hailstorm results and exposures by comparing the principal characteristics of an insurer’s crop hail portfolio to the broader market in order to more accurately assess exposures.”
It’s based on a broad database of information on “total sums insured, premiums, losses and quantities insured and bought from the Italian assisted hail insurance market since 1998,t eh announcement continued; “ERA divides this information into seven causes of risks, or insurance coverage, grouped by single risk (hail), multi-risk (hail, frost and hoar frost) and product yield-based (MPCI) policies.”
“Historically, there has been a wealth of information available on crop hail results in Italy, but what has been missing is a program that can analyze all of the available data and more effectively evaluate risk, on both a national and regional level,” stated Andrea Manzitti, Managing Director and head of Guy Carpenter’s office in Italy. “With ERA, it is now possible to create detailed, customized crop hail analyses, both by aggregating data across various provinces and by looking at different product mixes within a single geographic area. ERA can also provide thematic maps that graphically show portfolio exposures in a given risk zone.”
Guy Carpenter also noted that ERA can be used to:
— Compare the exposures and results of hail portfolios with broader market data from a given year or period of several years
— Facilitate the creation of a new hail portfolio for companies interested in expanding their crop hail business by simulating, on the basis of historical data, loss ratio development
— Evaluate underwriting risk levels in different geographic zones and by product for existing portfolios, by using thematic maps
— Estimate exposure limits based on the volatility of historical results per province and/or per product
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