The IUMI Cargo Committee has formed a working group with California-based risk modeller Risk Management Solutions (RMS) to work jointly on static CAT cargo modelling.
Nick Derrick, senior cargo underwriter at Travelers and IUMI cargo committee chair, wrote in the new IUMI Eye newsletter that “ports are getting bigger, which means larger amounts of cargo are being stored resulting in vast accumulations of risk”. Exposure management tools had become vital in assessing the risks to marine insurers. The new working group meets once a quarter via video conferencing and includes underwriters from New Zealand, Japan, Germany, France, USA and the UK. IUMI cargo committee secretary Mikaela Tamm provides legal guidance to the group.
The key variables under discussion by the working group include:
Vulnerability: Derrick noted that until recently the industry norm “best practice” was to model cargo & specie as “warehouse contents” in property models. However, the vulnerability varied widely, depending on the commodity and on its storage method/build quality.
Exposure management: Cargo exposures change over time. Best practice for marine CAT risk management dictates a better understanding of cargo CAT risk and its correlation with property CAT risk.
Port-specific industry exposure databases: How long cargo spends at a location is critical in determining port accumulations, and can be highly influenced by variables such as weather, port automation, import/export ratios, and labour relations.
Derrick said that “marine underwriters are now beginning to embrace modelling and the IUMI cargo committee is working closely with RMS to accelerate and improve the use of catastrophe models in the marine industry in an effort to better manage the risk to cargo from natural catastrophes.” http://www.rms.com/perils/marine-cargo https://iumi.com/news/iumi-eye-newsletter-march-2017