Mapping the Risk Landscape of Terrorism

Pitney Bowes MapInfo has teamed up with Exclusive Analysis to bring new intelligence about terrorism into insurers’ risk-assessment systems. Pitney Bowes MapInfo’s Craig Bedell and Simon Sole of Exclusive Analysis talk about the new alliance.

Best’s Review: Can you give us a deeper description of what TerrorRisk is about?

BEDELL: As terrorism analysis becomes more important from a catastrophe risk-management and portfolio risk-management perspective, we’ve formed an exclusive relationship with Simon Sole and Exclusive Analysis to provide detailed, scored insight for points of interest around the globe that underwriters and portfolio risk managers can use in assessing their aggregate exposure to potential terrorism hot spots as well as individual underwriting considerations.

These points of interest are scored by Exclusive Analysis and provided in a format that is convenient for business users to integrate into their location intelligence process to precisely analyze the likelihood and propensity for an event to occur in a particular location.

BR: How is this information obtained?

SOLE: Exclusive Analysis is a strategic intelligence company. We spend our time scanning the world, gathering information and turning it into actionable, decision-ready intelligence. The element we’re doing with Pitney Bowes MapInfo is adding the location intelligence, since terrorism takes place somewhere, that’s an important component. We have 1,200 people around the world who report information back to us.

BR: Are you working with risk modelers?

BEDELL: Pitney Bowes MapInfo has had a long-standing relationship with the three primary cat modelers. We’ve developed integration components that allow our clients to tap into the analyses that are afforded by these very powerful tools to allow the subscribers to those services to utilize the insight that they gain from those and apply it to other risks and exposures that aren’t necessarily covered by those models.

SOLE: We see cat modeling and intelligence-led probabilistic forecasts as rather distinct activities. In terms of how they’re utilized, modeling is a defensive exercise. It tells you if you’ll still be standing after a particular event. Of course insurers will have to answer that question to satisfy rating agencies and regulators, but there’s actually another question. Which event is more probable, and which isn’t? And over the long term, this will be more relevant to profitability. It is, therefore, a more proactive exercise. In the context of terrorism, that’s explicitly the case. Keep in mind that the buyers of terrorism may have unique information about their surroundings and the market that often selects against an underwriter.

BR: Does this mean that terrorism really is insurable?

SOLE: Terrorism manifestly is very insurable because there’s an awful lot of premium in it. As for the underwriters today, we’re helping people to understand what those exposures are. The point we would make about terrorism is of course the ancient debate as to whether terrorism is actually modelable because there’s no “data,” there are not so many events. If you’re an intelligence company like ours with a very finely tuned radar scanning the world, you pick up a very wide intelligence set, which you can then analyze.