Property Claims Services (PCS), a Verisk subsidiary, has extended the catastrophe loss aggregation methodology, previously developed for use in Japan, to cover more territories in the region.

Starting Jan. 1, 2020, PCS will report insured losses from catastrophe events in Australia, New Zealand and Southeast Asia (Brunei, Burma, Myanmar, Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam).

Future events as well as those in the historical database will need to meet an industry insured loss threshold of $3 billion, said Jersey City, N.J.-based PCS, which compiles and reports estimates of insured property losses resulting from catastrophes.

The move was made in response “to significant global reinsurance market demand” after the roll-out of the Japan methodology in February 2019, said PCS.

The industry has used the Japan methodology for industry loss warranty (ILW) trades, while reinsurers and insurance-linked securities (ILS) fund managers have confirmed the usefulness and effectiveness of the streamlined methodology for worldwide loss reporting and indicated they had further appetite for tools of this sort from PCS.

PCS said the latest suite of industry loss indices is designed primarily for reinsurance and ILS sector loss benchmarking and for use in ILWs.

The lack of independent, robust and reliable industry loss estimates has resulted in changes in fund valuation to trapped collateral following large catastrophe events, said PCS.

The PCS expansion into Australia, New Zealand and Southeast Asia is expected to include four historical loss events. Several are being kept open to address further loss development, including the 2011 Christchurch, New Zealand earthquake. Other events in the database include the 2011 Thai floods and the 2004 Banda Aceh event.

“Our historical loss database is designed to address three market needs. First, it demonstrates our ability to put together loss estimates, which we believe differentiates us from other expansion efforts around the world,” said Tom Johansmeyer, head of PCS, in a statement.

“Second, it’s important to show what you plan to do going forward. Additionally, the database provides for better historical analysis,” he added. “In 2011, for example, significant catastrophe loss activity occurred in Thailand, New Zealand and Japan. Now, it’s possible to develop a more reliable global view of the loss year.”

Worldwide catastrophe market players still reference 2011 frequently but have had to cobble together numbers from a wide range of inconsistent and incomplete data sources, PCS explained.

“The historical database provides a foundation for introducing past losses that are still subject to development,” noted Johansmeyer. “In particular, the deterioration associated with the New Zealand earthquake losses of 2011 demonstrates the importance of keeping an event open for as long as necessary.”

The longest resurvey periods on record for PCS are more than 20 months, with even longer commitments for some events in the specialty lines loss reporting platforms, said PCS.

“Given our long track record in the United States, we were cautious when launching PCS Japan. After all, it brought a new approach to catastrophe loss estimation that’s a bit different from what we have in Canada, Turkey and Mexico,” said Ted Gregory, director of operations, PCS.

“Based on the early signs of success in porting our specialty lines methodology to catastrophe-style global terror events, we were confident in starting with Japan. Now, less than a year after our first estimates went live for Jebi and Trami, we see the importance of accelerating our entry into new markets,” he added.

Source: PCS/Verisk

*This story ran previously in our sister publication Insurance Journal.