Interview: Kevin Brawley, CATEX guest columnist


Reaping what you sow C


atastrophe underwriters must use best practices for data capture and analysis to


be competitive, but the very best underwriters use cutting-edge processes and tools as they strive to find a competitive advantage. These ‘über-underwriters’ efficiently vacuum


up data of all types and from all sources, clean it up, validate its accuracy, and do sophisticated analysis on the fly. They have the ability to format this data for use in multiple commercial and academic models, rating engines, risk scoring tools, and non- modelling based exposure aggregate analysis. Capturing and processing large amounts of


data, whether from programme bordereaux, submission spreadsheets, or portfolio data dumps, is a tremendously difficult, time-consuming and expensive proposition. Standards are high: the best underwriters strive to reach 100 percent of locations with latitude/longitude geo-location, data gaps filled, and data accuracy verified. This is an immense task, but excelling at data


capture pays large dividends. In particular, better data sent to modelling returns better analysis. Using high quality data to look at other exposure perspectives, such as predefined territory limits and exposure aggregates, or concentrations of exposure for various concentric centroids, gives


Kevin Brawley


“Data capture excellence is a process, and it takes time to develop and mature.”


the underwriter a better picture of worst-case scenarios, and allows ‘what if ’ scenarios to be pursued. This non-modelling analysis is especially important for cat exposure management.


Underwriting discipline vital for survival I


n order to navigate the current soft market, reinsurers need to take a meticulous approach


to business, paying particular attention to client selection and underwriting. That is the view of Andrew Barnard, managing director—head of international property for Markel Global Reinsurance. “This is not the first soft market that has ever


existed and soft markets always last longer than hard markets, so it’s a matter of negotiating your way through, trusting your system and trusting the decisions you have made before,” he said. He added that a particular focus at Markel is


client selection. “There are some great cedants out there who understand relationships, understand the whole process and the soft and hard market—they are the great


21.10.14 TUESDAY


Any risk model is only as good as the data input in the first place; underwriters taking this seriously are getting ahead of the game, argues Kevin Brawley, CATEX guest columnist. For example, Tom Bolt of Lloyd’s was


very clear in a February 2013 interview with Intelligent Insurer when he warned underwriters not to rely exclusively on modelled data if they were going to come to him asking for relief. “You need to challenge your model, but how can you do that if you don’t have underlying data to challenge that model with?” How does an underwriter get to the next level?


Some are building tools in-house. Others are using third-party software applications, such as CATEX’s Data Vera, that streamline the capture, review, cleaning, audit, and analysis of data. Some consultants (Karen Clark, TigerRisk)


and brokers (Aon, Guy Carpenter, and Willis) are developing tools to help clients achieve this level of data capture and analysis. Catastrophe modellers (AIR, EQE, RMS, and Oasis) are also hard at work developing data capture and verification tools. Data capture excellence is a process,


and it takes time to develop and mature. It’s evolutionary. The sooner you undertake the journey, the sooner you reap the benefits. n


Kevin Brawley is a consultant and former reinsurance CEO. He may be reached at: kevin@e-brawley.com


need and the ones we will continue to support.” Barnard added that Markel is starting to


look holistically at its clients, seeking to meet their needs across a range of lines. “We are certainly looking to connect the dots


between property and casualty, and Jed Rhoads’ appointment [as chief underwriting officer of property reinsurance] will help with that,” he said. In the throes of the current soft market, he


said, reinsurers need to be able to trust their underwriting discipline. “If you let discipline drop, that becomes


clients we


the chink in your armour. You need to be very thorough with the underwriting—even more thorough than before, making sure that you are not leaving any gaps open.” The question that everyone is now facing, he


www.intelligentinsurer.com | www.bermudareinsurancemagazine.com Andrew Barnard


added, is how to achieve growth, and while he is aware that there is potential in diversification, he believes this needs to be approached cautiously. “We at Markel are not going to diversify


for the sake of diversifying. If you have not properly diversified or thought about your diversification, it needs to be carefully thought through. You need to understand the risk you are taking on.” n


DAY 2: Tuesday October 21 2014 | BADEN-BADEN TODAY | 11


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