AIR Worldwide, provider of risk modeling software and consulting services, has updated their Multiple Peril Crop Insurance, a model that estimates underwriting gains and losses based on weather and crop yield probabilities which runs on their software CATRADER, to enhance risk management capabilities for catastrophe-exposed agricultural treaties. Munich Re, a global reinsurer, has already licensed the models.
Updates for U.S. and China include multiple price volatility catalogs and incorporate the ability for the user to modify industry premiums by changing the default values to the rates of key program crops adjusted by the U.S. government. The final update is incorporating all years from 1974 to 2011 in the historical event catalog, as well as adding reporting tools.
“The ability to analyze the sensitivity of agriculture portfolios to different yield and price volatility scenarios is available in AIR’s new model,” states Lambert Muhr, senior underwriter for agricultural risks, Munich Re, in a release . “That represents a major advantage given the recent changes in overall premiums, premium rates, and other uncertainties affecting this market.”
The model for China includes the latest policy conditions and the database of industry exposure.
Released in the U.S. in 2007 and China in 2011, the AIR crop models address weaknesses found in traditional models, says Dr. Oscar Vergara, business development manager at AIR Woldwide.
Vergara adds, “To provide the most accurate probabilistic estimate of potential crop portfolio losses, they account for the effects of weather, technology improvements over time, changes in policy types and their market penetration, and changes in government protection agreements.”
Over 400 insurance, reinsurance, financial, corporate, and government clients use AIR software and services for catastrophe risk management, insurance-linked securities, detailed site-specific wind and seismic engineering analyses, and agricultural risk management.
[Check out: U.S. Accounted for 90% of Insured Natural Catastrophe Losses in 2012: Munich Re to learn more.]
Zarna Patel is a staff writer for InformationWeek's Financial Services brands, which include Bank Systems & Technology, Insurance & Technology and Wall Street & Technology. She received her B.A. in English and journalism from Rutgers University College of Arts and Sciences in ... View Full Bio