Companies rely on catastrophe models to provide reliable estimates of extreme event loss. However, the reliability of model output is only as good as the quality of the exposure data input. Information on replacement value, location, and building characteristics needs to be both readily available and reliable.
The industry is making progress in this regard. Yet there remain many instances of catastrophe analyses being conducted without detailed and high-quality data on individual properties. With the threat of increasingly large catastrophe losses, the need for companies to thoroughly understand their exposure data—and its shortcomings—is critical.
This new awareness is leading insurers and reinsurers to re-think how they approach exposure data collection, management, and assessment. In fact, reinsurers and rating agencies are now requiring companies to report in detail on the quality of their exposure data. Companies need the ability to easily, but comprehensively assess data quality, and if necessary, update building information for individual properties. Equally important is the ability to effectively communicate portfolio exposure data quality both inside and outside the organization.