Exposure Data Initiative Makes Jump into Modeling Firms

The push to create industry-wide exposure data format now includes participation from a catastrophe modeling firm, an important step that proponents argue will lead to broader participation among reinsurers and primary companies for an industry-wide standard.

Earlier this month catastrophe modeling firm AIR Worldwide announced that it has agreed to support the binding authority exposure data standard being advocated by ACORD, the non-profit group that develops data formats for the insurance industry.

The particular standard — dubbed U.S. Property Binding Authority ER3001 — deals with exposure data provided U.S. property casualty risks.

Practically, adoption of the standard by AIR will allow the firm to collect and include exposure data into their models without having to translate from myriad of formats, says Giovanni Garcia, director of client relations at AIR Worldwide.

“There has always been significant technical challenges around gathering exposure data,” Garcia says. “The biggest challenge is the collection point and making sure that the data is sourced correctly.”

Specific data points — such as address information, building values and secondary risks — will be input into a standardized format that allows AIR to build that information into their models.

Adopting the standard will allow AIR to streamline the process of collecting exposure data and avoid errors often made in the translation from different data formats, Garcia added.

“If you have something on a standardized platform you can have a robust system,” Garcia says. “If you don’t, you can lose some data in the transfer.”

The ER3001 standard is already in used among U.S. managing general agents (MGA) and their London Market counterparts, says Puneet Bharal, head of Advisory Services for ACORD in London.

“The MGAs for the cover holders in the U.S. are being asked to supply information in different data formats,” says Bharal. “They need to complete it by hand or code up by output for every insurer that they deal with, so it has become very inefficient to do this on a quarterly basis.”

By adopting the exposure standard, the MGAs are able to communicate exposure data to the Lloyds syndicates on a streamlined basis.

Bharal said with the additional of AIR, broader adaptation of exposure data standards among underwriters, cedents and even other catastrophe modeling firms will take on new importance.

“Every company in the insurers industry is trying to quantify its exposure data,” Bharal says. “The ability to share exposure data is a priority because the current system is a mess.”

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