Praedicat develops insurance tool for COVID-19 liability

Liability emerging risk modelling firm Praedicat has developed a suite of scenarios for the casualty insurance market that allows insurers to track exposures, establish reserves, and manage aggregations to help combat the impact of COVID-19 pandemic.

The scenarios are designed to help insurers that have a clash risk from coronavirus that impact general liability and directors & officers (D&O) lines within an insurer’s portfolio. Clash refers to the situation in which a single underlying event causes multiple claims which can threaten the solvency of insurers. The coronavirus creates clash risk for casualty insurers both within and across lines of insurance.

Praedicat has applied previous mass litigation precedents to anticipate how COVID-19 liability could develop. These new clash scenarios include loss estimates allocated to companies that might be named in litigation and also to the insurance line that would cover the loss, allowing insurers to estimate exposure in their own portfolios.

The firm developed the solution within the Lloyd’s Lab, working with mentors from Argo, Hiscox, StarStone and Lloyd’s. The Lloyd’s Lab is an insurtech incubator based in the insurance and reinsurance market, Lloyd’s of London. Praedicat participated in the fifth cohort of insurtechs at the Lloyd’s Lab, and is part of a fast-tracked COVID-19-themed group set up to develop technology that would support the Lloyd’s market against future waves of the coronavirus or other pandemics.

“This is a hugely exciting development for Praedicat and for the market,” said Robert Reville, chief executive officer at Praedicat. “The liability risk relating to COVID-19 is front of mind in the global insurance and reinsurance market right now. We are proud to have had the support of the Lloyd’s Lab to develop these capabilities for the industry.”

Emma Watkins, head of exposure management for Lloyd’s, added: “For the insurance industry to maintain its critical role in facilitating recovery from catastrophes it is vital that emerging and clash risks are fully understood by the market and the insured. We appreciate Praedicat’s efforts to help the industry with this novel emerging risk.”

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