Casualty Accumulation Risk

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Casualty accumulation is the concentration of insured risks or insurance coverages that may be affected by events or circumstances that cause substantial losses under several insurance policies, and potentially over multiple years and geographies. In the past, casualty accumulation has led to well-known claims complexes such as asbestos, the Mont Blanc Tunnel accident and the Deepwater Horizon event.

The increased interconnectivity and interdependency of the world due to globalization, technology advances, regulatory changes and macro-economic factors heightens the challenges faced by the re/insurance industry in terms of detecting and managing accumulation potential within the casualty portfolio. As supply chains span countries and companies, and new technologies develop, the risk of casualty accumulation increases.

The Chief Risk Officer can enable controlled risk taking by sponsoring improvements in modelling techniques, and also by fostering better understanding of casualty risks by capturing essential exposure information and key coverage aspects on a standardized basis for the whole portfolio. Improved understanding of assumed exposure through more complete data and better risk monitoring by building standard scenarios will support the development of new products. In turn, that will enhance the ability of the re/insurance industry to better-address earlier the casualty insurance needs of a fast evolving society.

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