PCS creates new loss aggregation service for terror events


PCS has launched PCS Global Terror, a new loss aggregation service that provides industry loss estimates for worldwide terror events with insured physical damage and business interruption losses of at least $25 million industrywide.

According to PCS its new service reflects significant insurance and reinsurance market demand for an independent third-party view of industry loss estimates from terror events. PCS Global Terror enables insurers, reinsurers, and other stakeholders in the global risk and capital supply chain to gain access to what PCS described as “an unbiased view of the industry loss for some of the most sensitive insurance events worldwide.”

Additionally, they can use the index to facilitate reinsurance and alternative risk-transfer transactions, such as industry loss warranties (ILWs), an area where the need for a loss aggregation service has been palpable.

PCS added that although a number of data sources are available for insurance information following a terror event, none is completely unbiased—which is where PCS makes a difference. As the only truly independent loss aggregation platform in the global insurance industry—as demonstrated in several regions and specialty lines over the past 70 years—PCS is uniquely equipped to provide industry loss estimates for terror.

“Terror has been a difficult risk for the global insurance and reinsurance industry,” said Tom Johansmeyer, assistant vice president, PCS. “Accumulations have risen over the past few years as reinsurers have accepted the terror risk into natural catastrophe programs to hold the line on pricing. Transferring the risk cost-effectively becomes tough when the risk bearer isn’t compensated for taking the risk up front. Alternative sources of capital and industry loss triggers may provide a greater opportunity for capital management.

“Historically, the terror ILW market has been constrained by the lack of a credible, independent industry loss index. We launched PCS Global Terror at the specific request of several clients because they wanted to improve how they manage terror risk, but the tools already in the market weren’t sufficient. We’ve listened closely to the insurers, reinsurers, and ILS funds pioneering coverage for this risk and included their feedback to ensure we would bring a useful and reliable loss aggregation platform to market.”

PCS, Tom, Johansmeyer, terror, loss, aggregation, industry, worldwide, estimates, risk

Bermuda Re