Loss Modelling
Loss modelling can determine whether an existing insurance placement structure provides optimal value in balancing cost of risk transfer and cost of risk retention. Echelon Australia uses Cost of Insurable Risk (COIR) analysis for specific insurance classes to evaluate this optimum balance.
Echelon’s proprietary loss model provides:
- A better understanding of the effectiveness of insurance programmes;
- A better understanding of the true cost of insurable risk; and
- A better basis for risk decisions.
The analysis can assist in determining the best value insurance programme placement structure, taking into consideration the cost of retaining risk, not just the upfront insurance premium, fees and charges.
Our sophisticated systems allow for detailed analysis of complex deductible structures where several layers of retention are required (for example, a split of risk retention between business units and head office) and can detail the modelled cost impacts by business unit.
Some examples of our services:
- Quantitative analysis of historical losses
- Calculation of the current COIR – the sum of retained losses, premium, fees and charges for each insurance class (see the separate commentary on COIR for more detail).
- Comparison of the COIR for various deductible and insurance placement options
- Analysis of complex deductible structures
- Loss analysis by business unit
Loss modelling is best suited to insurance lines where a portfolio of losses has been established.
Note that loss modelling results are an indication only of potential loss retention and the results do not replace actuarial advice.
For further information please contact us.