PERILS to provide catastrophic exposure and loss data for Australian motor

Insurers can “use the motor data to enhance its modelling capabilities and ultimately its understanding of the risk”

PERILS to provide catastrophic exposure and loss data for Australian motor

Insurance News

By Bethan Moorcraft

PERILS, an independent Zurich-based organisation that provides natural catastrophe exposure and event loss data, is extending its line of business reporting in Australia to include personal and commercial motor.

The firm, which has covered the Australian property market since late 2016, will include Australian motor as part of its Industry Exposure Update to be released in April 2020. It will look at the same perils currently covered for the property line of business - earthquake, flood, tropical cyclones, extratropical cyclones, hailstorms and bushfires – and will publish data via its database on market-wide motor sums insured exposed to these perils.

Motor insurance is a major line of business in the Australian market, and, consequently, is a significant contributor to losses. Major weather events in the past few years have really taken their toll on the industry, with hailstorms and flooding causing particular problems. The brutal hailstorms - featuring baseball-sized hail – that lashed across Victoria, NSW, Queensland, and ACT in January 2020 resulted in approximately 70,000 claims, many of which were motor-related, costing the industry around $638 million, according to the Insurance Council of Australia.

Since entering the Australian market, there has been demand on PERILS to provide motor exposure and loss data. The firm will continue to collect property sums insured, in addition to motor sums insured and motor event loss data from primary insurers in Australia per postcode (high-resolution CRESTA Zones). The firm will provide event loss data for any events above a market loss of $500 million caused by natural perils, for property and motor market losses combined.

“With the addition of motor, this will present the opportunity for the industry to gain an improved and more comprehensive understanding of industry exposures and losses,” said Darryl Pidcock (pictured), head of PERILS Asia-Pacific. “This enables the industry to use the motor data to enhance its modelling capabilities and ultimately its understanding of the risk to the same level provided by PERILS already for property.

“PERILS also acts as an independent reporting agent. The addition of motor potentially can facilitate the flow of new capacity into Australia through various reinsurance and retrocession-related transactions. These transactions can potentially include motor going forward using PERILS exposure data to structure an industry loss index, as well as PERILS reporting the losses post event on a consistent and independent basis. Therefore, providing industry exposure and loss data can contribute to the sustainability of capacity over time. Australia is a major user of international reinsurance capacity for cat risk protection hence improving the availability and reliability of motor data, we believe, can benefit the local industry through various forms of capacity.”

This latest expansion is certainly not the end of the road for PERILS in Australia. According to Pidcock, the firm is always looking for new opportunities, both in terms of adding new markets as well as enhancing its offerings within existing markets.

“Australian motor is a good example of this whereby we have been receiving increasing interest from the industry in including motor going forward given it is such a major line of business in Australia,” he told Insurance Business. “Another example is the development of our Wind Jeannie industry loss forecasting tool in late 2018 for Australia. This enables our licensees to receive timely wind gust and industry loss estimates at a postcode resolution as a tropical cyclone or major extratropical storm is approaching. 

“We’re driven by industry needs and we will continue to engage actively with the market to determine where we can widen our offerings. At this stage, as we begin to offer motor, our priority in the short term will be to deliver up-to-date and quality exposure and loss data for both property and motor lines in Australia. In the medium to longer term, if there are opportunities to expand further with the support of our insurance partners and other industry participants then we will definitely do so.”

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