AM Best Catastrophe

Question 1

AM Best Catastrophe - Reasons cat loss is primary threat to financial strength

Answer 1

shift in frequency, concentrated population growth and complex supply chains, recent cats produced losses across multiple exposure thought to be uncorrelated

Question 2

AM Best Catastrophe - Components of Data Quality

Answer 2

proper coding of loss exposures, geocoding of exposures, monitor aggregate loss exposure, audit exposure coding, current ITV analysis

Question 3

AM Best Catastrophe - Components of Monitoring Exposure

Answer 3

use cat modelling tools, include other coverages such as auto pd, zonal aggregate limits, be able to explain model outputs, understand PML, accurate propert assessments

Question 4

AM Best Catastrophe - Components of controls

Answer 4

set aggregate limits, appropriate reinsurance program, cat management integrated into underwriting process

Question 5

AM Best Catastrophe - Requirements in cat model

Answer 5

demand surge, storm surge, fire following, secondary uncertainty, and near term event set

Question 6

AM Best Catastrophe - Material sources of cat risk

Answer 6

property structure and contents, additional living expenses, business interruption, flood, auto pd, workers comp, energy, ocean and inland marine, crop, loss adjustment expenses

Question 7

AM Best Catastrophe - Stress test procedure

Answer 7

test second event after, BCAR allowed to fall 30 pts depending of financial flexibility, if first event is quake lower second to 1-in100 year