TWIA opts for Aon for catastrophe modeling services

TWIA opts for Aon for catastrophe modeling services

The Texas Windstorm Insurance Association (TWIA) is now set to lastly appoint insurance and reinsurance broker Aon to offer disaster threat modeling services, after the company was advised by its Actuarial & & Underwriting Committee after a second round of RFPs. TWIA had actually released a request for proposals (RFP) for catastrophe modeling services back in October 2021 and the Committee advised and fulfilled Aon be put forwards for the task.
That happened at the very same time as TWIAs Board thought about a change in reinsurance broker and chose moving far from incumbent Guy Carpenter, to designate Gallagher Re (Willis Re at the time of the decision).
On the new risk modelling service supplier, TWIAs Board asked for the RFP to be reissued, possibly due to there being too couple of responses the first time around, as it appears just Aon reacted that time.
So the RFP for catastrophe modelling services was released once again in December and this time actions came in from Aon, Guy Carpenter and likewise AIR Worldwide (part of Verisk).
The effective company would provide disaster modeling analysis to help the TWIA Board in its decision of the 1-in-100-year probable optimum loss for the 2022 typhoon season and likewise in making reinsurance purchase choices.
The Committee met the other day and Aon has won the proposal and now a suggestion will be made to the TWIA Board to approve Aons visit.
Aon had pitched two levels of catastrophe modelling services and we comprehend the Committee selected Option 2 the first time around and probably once again the other day, with a $1.6 million cost connected to that level of service.
We expect to see TWIA go back to the catastrophe bond market in the first-half of 2022, in particular as the Association may look to solidify up its reinsurance arrangements in 2022, after the significant impacts of losses from hurricane Ida in 2015.
TWIA has actually accessed the catastrophe bond market for reinsurance every year since 2014 with an Alamo Re issuance, all of which were brought to market with the help of AIR Worldwide as the third-party danger modeller.
We anticipate that will not alter, as it is not common for a broker-owned modelling team to work on 144A disaster bonds, with the large, independent danger modeling firms more most likely to be selected for this function.
The Aon catastrophe modeling services will offer valuable insights to assist notify TWIAs reinsurance purchases and usage of catastrophe bonds going forwards though, with critical choices often taken based upon the PML of the TWIA portfolio and how much cover it needs to purchase as a result.
TWIAs reinsurance program reached $1.93 billion in size in 2021, having actually been renewed in June, with catastrophe bonds comprising 57% of the tower, showing the value of access to the insurance-linked securities (ILS) market for the recurring market insurance company

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