View this article online: https://www.claimsjournal.com/news/international/2006/04/07/67131.htm
Standard & Poor’s Ratings Services announced that it has revised its criteria for measuring the catastrophe risk of primary P/C insurance companies, according to an article published today.
The article, which is titled “Property/Casualty Insurance Criteria: Primary Insurer Catastrophe Capital Charges Revised,” also notes that “these changes do not affect reinsurers, the criteria for which were last revised in July 2005.”
The bulletin explained that S&P “previously charged catastrophe risk for primary insurers using its premium risk factors (C3) within the risk-based capital adequacy model. By contrast, the new criteria will capital-charge catastrophe risk with company-specific data for exposures, so this new catastrophe charge reflects each company’s particular risk profile.”
“The reason for this change is partly to have consistent criteria across the insurance and reinsurance sectors,” indicated S&P credit analyst Damien Magarelli. “Also driving the criteria revision were the hurricane events of 2005 and, just as significantly, the frequent catastrophe events in 2004 in the Southeast U.S. and in Japan.”
Significantly in the wake of those catastrophes, S&P said: “These events demonstrated that primary insurance companies face a significant amount of catastrophe risk and volatility within reported results.”
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