Lloyd’s and Arium release joint paper “Designing Liability Scenarios”

Lloyd’s and Arium have just published a new report on the methodology underlying Arium’s liability exposure management tool.

http://www.lloyds.com/news-and-insight/risk-insight/library/understanding-risk/designing-liability-scenarios

Speaking about the new report, Trevor Maynard, Head of Exposure Management and Reinsurance at Lloyd’s, said:

“Insurers have historically faced a variety of challenges when attempting to manage liability exposures – including the difficult task of identifying where exposures are likely to accumulate. The approach explored in this report, which has been developed by Arium, centres on the mapping of liability scenarios against trading relationships while considering the legal system within which the economy functions, and is one example of how this issue can be overcome. As such, this approach is a promising step towards improving insurers’ understanding of emerging liability risks.”

The methodology set out in the Lloyd’s paper addresses those issues raised by the CRO Forum in their recently published report on casualty accumulations (http://www.thecroforum.org/casualty-accumulation-risk).  This method and Arium’s tool embodying it can help underpin a consistent and realistic way of designing exposure scenarios by harnessing supply and distribution chain data as the basic building blocks. This is a first step in helping take liability exposure management down the path taken decades ago in property classes, and enables better quantification of possible risk accumulation.

If you are interested in knowing more about the tool or method, please get in touch.