Spatial Models for Reinsurance Applications

By Joe Francica

Guy Carpenter & Company, Inc., a member of the Marsh and McLennan Companies, is using Oracle Spatial in conjunction with the map algebra functions of PCI Geomatics to help insurance companies develop risk assessment models. Guy Carpenter has released a product called i-aXs which is an online risk management platform that provides a number of tools to insurance companies, including:
  • Data mining
  • Portfolio analysis
  • Automated management reporting
  • Mapping tools
  • Satellite imaging
  • Real-time weather tracking
Shajy Mathai, vice president of the Instrat unit, the quantitative arm of Guy Carpenter, says the models that are now on the market provide clients with the ability to do complex analysis but do not provide sophisticated reporting and spatial data manipulation capabilities. These models, by themselves, do not provide an insurance company with a clear business strategy. Using the analytics in i-aXs, clients can develop risk surfaces that describe the marginal impact of adding exposure to a portfolio. With i-aXs, clients now have the ability to determine their loss levels and pinpoint those areas with a weighted average of the models, and then decide where they can add or remove business.

Mathai says that the modeling is done at the raster level but the risk is aggregated to the political geography as an index. The model results are then reloaded into an Oracle Spatial database. According to information provided by Oracle, the Gradient Analysis tool - part of the i-aXs suite of portfolio management solutions - shows the relative impact of losses to a client's portfolio at a specific risk level, by geographic area. According to Mathai, "With this tool, clients can develop a realistic underwriting strategy that allows them to plan their business growth and attrition in a more formalized, detailed and effective way."

Guy Carpenter was just recently recognized by Oracle with its Oracle Spatial Excellence "Innovator of the Year" Award at the Oracle Spatial Special Interest Group User's Meeting in Orlando this past April.

Published Wednesday, July 12th, 2006

Written by Joe Francica

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