Discovering Coverage Gaps using EigenProfiles

 In Brokers, Case Studies, Insurers & MGAs, Risk Managers

In planning for the property renewal of a key account, the client executive from a major retail brokerage firm focused the renewal strategy on evaluating natural catastrophe exposure, by identifying areas of accumulated risk and potential gaps in insurance coverage.

The broker’s client owned and operated about 100 schools throughout the United States, with significant exposure to wind and flood for its southeast locations. Evaluating the extent of wind and water exposed risks in the southeast would therefore provide the broker with timely insights prior to negotiating the property renewal pricing, while also ensuring the property program’s limits, retention and coverage terms were most appropriate.

The broker loaded the client’s schedule of locations into EigenPrism, and generated an EigenProfile report. The 13-page report, generated with a few simple clicks,  surfaced two hazards of particular interest to the client:

  1. Wind – the school locations were prioritized based on windstorm hazard based on 168 years of historical tropical cyclone data
  2. Storm surge – the top 5 school locations for storm surge flooding were identified as being exposed to 15 feet of storm surge in a worst case scenario, including 3 locations that would exceed 20 feet

With the storm surge risk identified, the broker’s next step was a deep dive analysis for all locations with an estimated storm surge in excess of 10 feet. This analysis computed maximum storm surge at high tide from category 5 hurricanes, based on NOAA’s SLOSH model.

As a result, a previously undetected protection gap in storm surge exposures was identified. The broker structured and placed an Excess Flood Program as part of the overall property renewal, which provided full coverage to the school locations at risk.

Post-renewal, the value of this added protection was realized during Hurricane Irma, as one of the Florida school locations came close to the level of storm surge flooding estimated in the analysis.

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