12.16. Maintain Risk Zones

Risk zone icon

Click the Risk Zone Management icon to see the Risk Zone Management window.

You can register, update, and find registered information about which risk zones are used for accumulation control.

The main function of this window is to divide countries into risk zone section s. A risk zone system (like CRESTA or NUTS) is at the top of the hierarchy, and it is then broken down by country, and then zones within that country. For example, CRESTA may be at the top (you can also use your own risk zone system, if you choose), Japan may be a category underneath CRESTA, and underneath Japan are several zones that are divided according to risk in that area.

All risk area systems are user defined, so they will vary from system to system.

You also have the capability to run a user-defined system in parallel with CRESTA or NUTS, and assign a single risk to multiple systems for more complex exposure control analysis.

Before you click a risk area system to open it, you see the name of the system, CRESTA, for example on the System tab on the right-hand side of the window. When you click a risk areas system, you see a list of countries under that system, which, when indicated with a plus sign, are further broken down into risk zones. The System tab turns into the Locations tab, and shows the name of the country in the Country field, and lists the perils and their corresponding codes in the Risks list window below it.

When you click a risk zone under one of the countries on the left-hand side of the window, the right-hand side changes again, and the Locations tab becomes the Risk Zone tab. Here you see the name of the risk zone and its corresponding code, and the Risks list window underneath displays the following information: Insurable Peril Type, Valid From, Valid To, PML and ToB/MCoB Combination.

After you have clicked on a zone (on the left-hand side of the window), you can then click once in the information window on the right-hand side of the window, and click the right mouse button to see the pop-up menu. (Note that you must click a risk zone zone, not a risk zone country.) You can select Exposure, or Add Insurable Peril if you have not selected anything in the list. If you do select an item in the list, you can also select Remove Insurable Peril,or Edit Insurable Peril from the pop-up menu.

Add Systems, Countries, and Zones

Maintain Risk Zone Systems #

Click once on a risk zone system to select it (but not open it), then click the right mouse button to see the pop-up menu. You see the following options: Edit, Add System, Remove System, Add Country, Expand, and Collapse.

Edit: When you select Edit, you see the Risk Zone System window, where you can change the name of the system and then add notes about the new system, if you choose. After you click OK, and return to the Risk Zone Management window, you see the new name of the system.

Add System: When you select Add System, you see the Risk Zone System window, just like the one you see when you select Edit. Write in the name of the new system, and notes about it if you choose.

Remove System: Select the name of the system you want to remove, and from the pop-up menu, select Remove System. The system disappears immediately.

Add Country: To add a country to a system, select Add Country from the pop-up menu. You see the Risk Zone Country window. Select a country from the drop-down list. Then, select one or several perils from the Available list, and click the right arrow button to move them to the Select list to apply those perils to the country you are adding.

Expand and Collapse options in the pop-up menu let you expand the branches in the hierarchy so that you can see all the levels, or you can collapse them to hide the levels.

Maintain Risk Zone Countries #

Double-click a system to see the countries it contains. Click once on a country to select it (but not open it), and click the right mouse button to see the pop-up menu. You have the options to: Edit, Add Zone, Remove Country, Expand, and Collapse.

Edit: When you select Edit, you see the Risk Zone Country window. Here you can replace one country with another. This functions in the same way as the Add Country option mentioned above. Select a country from the drop-down list. Then, select one or several perils from the Available list, and click the right arrow button to move them to the Selected list to apply those perils to the new country.

Add Zone: To add a risk zone to a country, select Add Zone from the pop-up menu. You see the Risk Zone window. Write in the name of the new zone in the Name field, and a code for that zone in the Code field. Click the Notes window and begin typing to add notes about the zone you are adding.

Remove Country: Select the name of the country you want to remove, and from the pop-up menu, select Remove Country. The country disappears immediately.

Expand and Collapse options in the pop-up menu let you expand the branches in the hierarchy so that you can see all the levels, or you can collapse them to hide the levels.

Maintain Risk Zone Zones #

Double-click a country to see the zones it contains. Click once on a zone to select it (but not open it). Then click the right mouse button to see the pop-up menu. You can choose between the following options: Edit, Add Zone, Remove Zone, Expand, and Collapse.

Edit and Add Zone both bring you to the Edit Risk Zone window. Here you can add a risk zone, or replace one risk zone with another. Write in the name of the new zone in the Name field, and a code for that zone in the Code field.

Remove Zone: Select the zone you want to delete. Select Remove Zone from the pop-up menu, and the zone are deleted immediately.

Expand and Collapse options in the pop-up menu let you expand the branches in the hierarchy so that you can see all the levels, or you can collapse them to hide the levels.

Maintain Type of Business/Main Class of Business Combinations #

The information used in the calculation of contract exposures, e.g. peril zone PML, could vary depending on the type of contract. SICS allows you to store this peril zone information per type and main class of business.

Register a new combination

1. Open Risk Zone from the desktop
2. Click on ToB / MCoB Combinations button at the bottom
3. In Type of Business / Main Class of Business Combinations window, right mouse click and select Add from the pop-up menu
4. Select wanted Type(s) of Business, if any
5. Select wanted Main Class(es) of Business, if any
6. Press OK

Note! It is not possible to remove Type of Business / Main Class of Business Combinations that are linked to a peril

Note! Deactivating a combination means that it can not be linked to more perils, but is still valid perils where it is already selected

Field description 2. Maintain Type of Business / Main Class of Business combinations

Maintain Insurable Perils #

Define Perils as Natural Perils #

Set up the perils that your company considers relevant for accumulation control, e.g. of the perils Explosion, Theft, Earthquake and Hurricane, you consider only Earthquake and Hurrican as natural perils.

1. From the desktop, select Reference Items
2. Open Reference Data Maintenance
3. Select Data Type Perils (code 00044)
4. Open the wanted peril value, e.g. Earthquake or Hurricane
5. Select the Parent Dependencies tab.
6. For Parent Data Type, select Class of Business
7. From the Available list, select the value Natural Peril
8. Select OK

Define Insurable Perils for Country #

1. From the desktop, select Reference Items
2. Open Risk Zones
3. Select wanted System
4. Select wanted Country
5. From the pop up menu, select Edit
6. From the available Risks, select the wanted perils
7. Select OK.

Add Insurable Peril #

To add an insurable peril:

1. From the desktop, select Reference Items.
2. Select Risk Zones.
3. Select a System.
4. Select a Country.
5. Select a Zone. You see the Risk Zone Management window.
6. In the Peril display list, at the bottom right corner, select Add Insurable Peril from the pop up menu.
7. Select a Peril and other information as you require.
8. Select OK.

Peril: The risk of catastrophe in a certain risk zone. Options available are the perils registered for the country of the selected zone.

ToB/MCoB Combination: Type(s) of Business and/or Main Class(es) of Business that this risk zone information, e.g. PML Factor, applies to.

Values: Customized by your company, e.g.:
Proportional Treaty, Non-Proportional Treaty
Proportional Facultative, Non-Proportional Facultative, Property

Mandatory: No

Functional Impact:
Maintain Insured Peril Cessions

Applicable for:
P&C, Cede

PML Factor: The PML (or probable maximum loss) is expressed in percent, and is related to the peril type you chose.

Valid From: Type in a date that indicates from when the insurable peril is valid. You can type the date in directly, or use the Calendar button to change the date.

When you type in the date directly, you can type in the last two digits of the year and the system will compute the year for you. Numbers from 00-19 are automatically calculated as 2000. Anything else is automatically calculated as 1900. For example, if you type in 010105, the system will read it as 01.01.2005.

Valid To: Type in a date that indicates the date the insurable peril is valid until.

Exposure Basis: Use the drop-down list to select the basis for which to calculate the exposure.

As-If Events: If you select As If as the type of Exposure Basis (in the Exposure Basis drop-down list), then the As-If Events field becomes activated, and you can select the type of As-If event.

If, for example, you select the name of an earthquake that happened in a particular country some time ago, you are indicating that the exposure will be calculated if that disaster happens again (according to the rest of the information you input in this window).

Nothing will appear in the As-If Events drop-down list, if As If is not chosen as the exposure basis.

When you click the Exposure button, you see the Accumulation Control of Perils window, where you can calculate risk exposure.

Remove Insurable Peril #

Select an item in the list and select Remove Insurable Peril to delete it. The item is deleted immediately.

Edit Insurable Peril #

When you select an item in the list, and then select Edit Insurable Peril from the pop-up menu, you see the Insurable Peril Properties window just like the one you saw for Add Insurable Peril. Simply make the changes you want to make, and click OK to implement them.