AIR strengthens risk pool consultation capabilities


Catastrophe modelling firm AIR Worldwide announced the availability of Public Risk Services, a new consulting service available to public sector institutions and stakeholders charged with managing catastrophe risk.

The service, led by AIR vice president John Rollins, was established to fulfill ambassadorial and educational roles and to provide a “knowledge nexus regarding the role, structure and risk-sharing frameworks of public risk pools”.

Rollins spoke to Bermuda:Re about the new group.

How was the Public Risk Services Group put together? Was there a catalyst for its formation?
The Public Risk Services Group is a strategic investment by AIR in recognition of the increasing role public institutions are playing both in directing public policy that affects the disaster risk insurance industry and in bearing the risk through federal and state pools. AIR’s continuing commitment to thought leadership on catastrophe risk assessment and management drove the unit’s establishment, and the opportunity to leverage my experience in both public and private sector governance was a natural fit to lead this new initiative.
How will easy access to AIR Worldwide’s expertise help public sector institutions deal with catastrophes and their aftermaths?
Public sector risk-bearing entities often operate with limited resources and strong public spotlights on their decisions, given that taxpayers are often ultimately at risk for deficits. AIR is committed to developing deep expertise in their specific domains and an ability to respond quickly and effectively to the unique needs of these types of institutions in areas such as, risk reporting to public stakeholders, risk financing structures and capital markets transactions, and block transfers of business to private markets.
How has the industry responded? Has the programme attracted any clients?
AIR has done many consulting projects for public entities around the globe in the past, such as the Mississippi and Florida insurance regulators, the Florida Division of Emergency Management, and the World Bank. We believe that public entities and stakeholders ranging from state risk pools, to insurance regulators, to emergency managers, to quasi-government entities devoted to loss mitigation and trade associations can benefit from our investment in applying AIR’s knowledge and reputation in catastrophe modelling to their missions.  The time is right to consolidate our centre of excellence and our educational function into a dedicated unit; to better support the diverse needs of the public sector as it manages catastrophe risk.
What implications, if any, will public sector access to expertise have for the catastrophe reinsurance market?
Private insurers and reinsurers will benefit strongly from AIR’s investment, on a number of fronts. In brief, private insurers are exposed to assessments and taxes from public pools, exposed to regulatory risk due to governmental agency decisions, and exposed to market upheaval when public decisions create unintended (or intended) consequences such as the “crowding out” of private capital when public pools offer products that are not priced in a way to adequately reflect the catastrophe risk. As public pools grow, all of these possibilities raise the stakes for applying best practices in disaster risk assessment and management in the public sector.  We want to help private insurers and reinsurers minimise these enterprise risks and maximise market opportunities.

Risk pooling, AIR, cat modelling

Bermuda Re