Collins employs experienced professionals who analyze risk portfolios using catastrophe models, assist clients in understanding and interpreting the results of those models, and use those results to support the marketing of the related reinsurance programs. Our proactive approach to risk management is fueled by cutting-edge technology and experienced professionals.

In addition to using certain proprietary and other industry-accepted tools, Collins licenses software from commercial vendors, including:

• Risk Management Solutions (RMS)
• Applied Insurance Research (AIR)
• EQECAT (EQE)

Collins has been involved in model development, model use, and presentation of results since the early 1990s. In the years since, we have worked with catastrophe model vendors as the models have been refined, new perils have been added to the suites of analyses, and the models have become important decision-making tools for insurers, reinsurers and regulators.

In our experience, the various models typically used in the industry can result in widely disparate results -- even on the same portfolio -- depending on the experience of the individuals performing the analysis. We have a strong understanding of the strengths and weaknesses of the various programs, and can help guide our clients in maximizing their value. Our staff is led by an experienced analytical team with strong backgrounds in the catastrophe models.

The catastrophe modeling process includes:

• Collection of the most detailed data possible to ensure the highest degree of accuracy in the analysis. This includes a full discussion regarding any potential shortcomings of the available data and the assumptions used to guide our analysis.
• A comprehensive probabilistic analysis of the portfolio. This analysis would include an interpretation of the results as well as quantifying the impact of key data assumptions. We identity the key drivers of risk to your portfolio, and discuss how modeled results will be used by reinsurers in pricing and underwriting the program.
• Further analysis of multiple reinsurance options using Collins' proprietary Dynamic Reinsurance Model (DRM) software. This provides a full risk/reward understanding of a variety of reinsurance options so that the optimal reinsurance program can be developed and marketed.

In our proactive approach, Collins continues to monitor the portfolio, to enable management to stay informed of exposure changes and their impact on the portfolio's potential risk. Collins also can help optimize its spread of risk through our Catastrophe Portfolio Optimization (CatPRO) analysis. This analysis yields a policy-by-policy risk/return comparison that allows the client to maximize premium and minimize reinsurance costs within a portfolio. CatPro, along with our proprietary net cat margin optimization method, are powerful tools to quantify the drivers of risk and optimize profitability.

Other ongoing catastrophe modeling activities include:

Concentration Risk Evaluation: This analysis identifies areas of high concentration using detailed location and exposure information. Areas of high concentration can be defined by regional boundaries as well as a specified mile radius. The areas are ranked and can include total exposure, policy/employee counts, and premium.

Realistic Disaster Scenarios: Understanding how a portfolio withstands a major event can help an insurer plan for that event. In this analysis, we simulate a large event against a portfolio on a risk-by-risk basis. This provides the user with insights into the total area affected, the total number of claims, and estimated losses. These critical variables can help management stress-test systems, call centers and claim personnel.

Exposure Evaluation and Mitigation: This analysis ranks policies in a portfolio based a variable risk measure defined by a client including variables such as the probable maximum loss (PML), average annual loss (AAL) and allocated reinsurance costs. The list highlights each policy's correlation to the entire portfolio and identifies those polices with unbalanced contributions. Underwriters then use the results to reevaluate those risks at renewal to better account for that policy's individual contribution on the overall results.

Real-time Loss Estimates: During an event, Collins provides clients with up-to-the-moment event information and loss estimates. These estimates are prepared using actual exposure information, measured against industry totals. We provide each client with a mean loss range, including the policies affected and the number of possible claims. These reports are essential in real-time disaster management and personnel deployment.