Last yr, catastrophe data aggregator and industry loss estimate provider PERILS revealed an extension to its services, with a recent methodology that mixes its standard data methodology with that of CRESTA CLIX, which the firm’s CEO Christoph Oehy has said will simplify the method for risk transfer use-cases including catastrophe bonds and ILW’s.
Back in November, when announcing its first loss estimate for the Storm Boris related severe flooding experienced across parts of Central Europe in September 2024, PERILS also revealed this variation to its methodology offerings.
That loss event estimate was the primary where it combined its own methodology with that of CRESTA CLIX, one other loss data service owned by PERILS.
The usual PERILS approach, now renamed PERILS CORE, involves collecting catastrophe event loss data from affected insurers which is then grossed as much as 100% market level to be reported on.
The CRESTA CLIX methodology is different, being based on the expert evaluation of a wide selection of insurance industry sources, but consequently it covers a much wider range of territories than PERILS CORE.
With the mix of the 2 under a recent catastrophe loss reporting methodology named PERILS EXTENDED, the corporate can from offer loss estimates everywhere in the world from January 1st 2025, aside from the USA.
Having provided its last quarterly update yesterday, the CRESTA CLIX service has now turn into a part of the PERILS product offering as PERILS EXTENDED, from January 1st 2025, complementing the present and now called PERILS CORE service.
Christoph Oehy, CEO of PERILS, commented on the change, “Up to now years, industry losses reported by CRESTA CLIX have been used as triggers in ILW transactions and in a single Cat Bond, along with industry losses reported by PERILS.
“Moving forward, by having a single reporting agency this can greatly simplify this process for the chance transfer markets, which was a key consideration once we decided to mix the 2 reporting services under the PERILS umbrella.”
Matthias Saenger, Manager at CRESTA CLIX, added, “We’re pleased with what we’ve got achieved with CRESTA CLIX for the reason that service was launched in 2020. The database now accommodates industry loss information for greater than 200 catastrophe events. The info has been often reviewed and updated, and is accessible in a clean and structured format, allowing underwriters and Cat researchers to deal with analytics reasonably than data cleansing.
“The CLIX team is looking forward to the launch of the PERILS EXTENDED service and we’re convinced that the merger with PERILS CORE will profit our users as it can provide single-source access to a comprehensive industry loss database.”
For PERILS, the mix with CRESTA CLIX means the corporate can provide a wider range of catastrophe insurance market loss estimates, could have a bigger and wider-reaching catastrophe loss database, and has greatly enhanced its territorial coverage for industry loss estimate provision.
As we had said before, we suspect the move could have been partially driven by market feedback, suggesting the industry wants access to more loss estimates with a strategy behind them, but can be perhaps more open to various kinds of loss estimate methodologies than might need been assumed.
We had also noted that, while this enhances the utility of the service and produce recent loss estimates to risk transfer market participants, the brand new methodology may not at all times meet users needs given the introduction of expert evaluation into the combo, reasonably than a reported loss data approach.
As we’ve at all times said in our reporting, more data is of course useful to those trying to structure and trade industry-loss triggered instruments, comparable to catastrophe bonds and industry-loss warrants (ILWs) and might open up recent risk transfer opportunities where before they’d not been feasible.
It can be interesting to see whether the brand new combined methodology from PERILS and CRESTA can drive greater use of those industry-loss index based risk transfer instruments over time.