Catastrophe Modelling Enhancement for a Leading Commercial Insurer

Project Objectives

Brighter Consultancy was tasked with improving the client’s Cat modelling processes
to strengthen risk assessment, ensure regulatory compliance, and enhance operational
efficiency. The key objectives were:

1. Pre- and Post-Bind Catastrophe Modelling:
   Utilising Verisk’s Touchstone software to conduct detailed risk analyses before and after
   binding policies, enabling underwriters to make well-informed decisions.
2. Monthly Portfolio Aggregation
   Performing monthly roll-ups at the class level to assess exposure and identify risk
   concentrations.
3. Gross Portfolio Grouping and Netting Down
   Using Analyse Re and internal tools to structure the gross portfolio and apply netting
   down techniques, providing a clearer view of net exposures.
4. Lloyd’s Reporting Compliance
   Preparing and submitting regulatory reports, including LCM5 and Realistic Disaster
   Scenarios (RDS), to meet Lloyd’s standards.
5. Underwriter and Committee Reporting
   Developing comprehensive reporting packs to ensure underwriters and internal
   committees have a clear understanding of class-level results.

Project Execution

Catastrophe Modelling with Touchstone
Brighter Consultancy used Verisk’s Touchstone v9 in a User Acceptance Testing (UAT) environment to analyse the client’s Cat modelled portfolio. This involved:

• Conducting in-depth reviews of key risk drivers and documenting findings for underwriters and the Enterprise Catastrophe Management (ECM) team.
• Ensuring compatibility between Touchstone v9 and the client’s internal systems, including LiveEP and Analyse Re, to optimise portfolio roll-ups.

Reporting and Integration

• Presentation of Findings
  Analysis results were presented to the ECM team and underwriters, highlighting significant changes and their impact on the portfolio.
• Model Change Documentation
  Detailed documentation was prepared to support model changes, ensuring smooth internal and external approvals.
• System Integration Testing
  Brighter worked closely with the ECM team to test the integration between Touchstone v9 and Sequel Impact v52, validating the functionality of key automation features.

Process Efficiency and Validation

• Process Efficiency Review
  A full review of the Cat modelling portfolio creation process was conducted, identifying areas for streamlining and operational improvements.
• Model Validation Approach
  Materiality thresholds were refreshed, and model completeness was assessed to strengthen the organisation’s validation framework and risk assessment accuracy.

Outcomes

Through Brighter Consultancy’s expertise, the client achieved:

Enhanced Risk Assessment
Improved pre- and post-bind Cat modelling provided underwriters with deeper insights, supporting more strategic decision-making.

Regulatory Compliance
Accurate and timely reporting ensured full compliance with Lloyd’s regulatory requirements.

Operational Efficiency
System integrations and process optimisations led to faster, more efficient portfolio management and reporting.

Robust Model Validation
The updated validation framework enhanced the accuracy and reliability of the catastrophe models.

This collaboration successfully enhanced the client’s catastrophe modelling capabilities, resulting in stronger risk management, improved regulatory alignment, and greater operational efficiency.

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