Verisk subsidiary PCS has teamed up with Asociación Mexicana de Instituciones de Seguros (AMIS) to launch a property catastrophe loss aggregation index for natural and manmade events across Mexico.
Qualifying events have total industry insured loss estimates of at least $300mn Mexican pesos ($15mn).
PCS said in a statement today (4 September) that its partnership with AMIS was forged to support better risk and capital management in the “catastrophe-prone” region.
Mexico is the fourth country to be covered by PCS, following the US, Canada and Turkey.
PCS Mexico will also use the same methodology as the data firm has employed for the past 70 years in the US, which PCS said shares a similar catastrophe profile to Mexico along with neighbor Canada. All three are exposed to tropical storms, earthquake, and hail, among other perils.
“And like its North American neighbours, Mexico has experienced catastrophe activity that has been both frequent and severe,” PCS said.
“With data dating back to 2010, PCS Mexico… shows that there have been three recent catastrophe events with industrywide insured loss estimates of at least $9.6bn Mexican pesos (approximately $500mn),” PCS added, noting that two of the three events occurred within the last two years.
With the aggregation tool due to be available for login by the end of the first quarter of 2020, PCS and AMIS said its new index is likely to impact the global reinsurance and ILS markets “fairly quickly”.
“Since 2006, eight catastrophe bonds have included Mexico; and feedback from clients around the world suggests that pent-up risk-transfer demand has been constrained by the lack of a reliable, independent loss aggregation solution,” the Verisk subsidiary explained.
PCS Mexico is one of a suite of loss aggregation tools from PCS, joining non-property cat loss solutions for marine and energy, cyber and terror specialty lines.
Speaking on the desire for a cat loss aggregation service among industry players in Mexico, Tom Johansmeyer, head of PCS, said: “Mexico has been one of the top enhancement requests we’ve heard from clients since I joined PCS, and interest has only grown over that time.”
Recaredo Arias, AMIS CEO, added: “The ISO/PCS platform will allow Mexican insurance companies to access robust information to calibrate their catastrophe risk models. This will benefit both insurers and insureds, while paving the way for product innovation.”
Dario Luna, managing partner at Akua Capital who was also involved in the loss index’s development, commented: “PCS Mexico presents a range of innovation opportunities and will surely trigger the interest of other Latin American countries.”