Evidence from:
- The Arium software uses official trade data to identify links between generators of risk, and via the product supply chain, the injured party.
- By adding liability insights, the hazard scenario can be tailored to explore the most likely routes to exposure, i.e. a risk scenario.
- Sum limits and sum premium can be explicitly calculated from the insurance portfolio.
The method is transparent, stress testable, reviewable and auditable. Calculations are analytical in nature. It is just algebra.
The tool is ideally suited to the assessment of emerging liability risks. All you need is a scenario based on the state of knowledge. The scenario can be refined as knowledge develops.
The Radar service is a great source of data for the development of scenarios. The next thing to do is supply Radar subscribers with pre-made scenarios on a number of emerging liability risks. These will be modified as and when new data emerges. Changes in exposure projections would be compared with risk appetite and decision thresholds. The tool will allow insurers to quantitatively assess the answers to “what if” questions.
