RMS Unveils Fire Risk Probablity Model

Newark, Calif.-based Risk Management Solutions has launched a probabilistic model to help account underwriters quantify and manage exposure to fire risk. Aimed at primary commercial and specialty insurers and reinsurers, the RMS Account Fire Model provides an link between engineering best practices and the account underwriting process, and supplies comprehensive data at the account level.

“Traditionally, fire risk underwriting has been based on limited exposure data and subjective analysis,” commented Craig Van Anne, RMS vice president. “As a decision-making tool to support the commercial underwriting process, the Account Fire Model brings consistency and transparency to the process of calculating fire premiums and selecting risks. By having comprehensive data on the properties within an account, underwriters can be more confident about assessing the profitability of the business they take on.”

Fire represents approximately 60 percent to 70 percent of the all risk premium paid to an insurer for a typical property account, RMS said. By helping to improve risk selection and pricing, the model should help improve the bottom line, the company said.

To assess the risk, the model simulates the behavior of a fire as it spreads through a building’s open doors and breached firewalls, and demonstrates the effect of sprinkler systems in helping to contain damage. The impact of fire department activity is then modeled by simulating response and control times based on actual U.S. fire incident statistics.

The model also provides an engineering assessment of the vulnerability of buildings, contents, and business interruption to fire.

“There was a serious gap in the market for a tool to model fire risk,” Van Anne said. “The next stage will be to incorporate the model into clients’ existing systems, so it becomes a seamless part of the underwriting process.”

Source: RMS

Topics Underwriting