RMS Purchases HailCalc Europe

Newark Calif.-based Risk Management Solutions, a leading provider of products and services for the management of natural hazard risk, announced the acquisition of HailCalc Europe, which it described as “the first fully probabilistic hail loss simulation software for Europe.” The model was built by a team of atmospheric scientists in conjunction with Swiss Re and has been actively used to assess hail risk in Europe since 2004.

“RMS is excited to offer the HailCalc Europe technology to a wide range of industry users through its extensive global support network,” stated Jörg Müller, VP of RMS Zurich. “There is an increasing demand for hail modeling in Europe, and together with recent and upcoming releases of new flood and earthquake models, RMS clients will be able to model key drivers of loss across most of continental Europe.”

RMS highlighted the importance of the hail model, as summer thunderstorms in Continental Europe often produce “damaging hail,” which, although localized, cause significant damage that is often underestimated. “Insurers are widely exposed to hail losses because cover is typically included within windstorm policies and most fully-comprehensive motor policies across Europe,” RMS noted. “The catastrophic 1984 Munich hailstorm generated more than €750 million [$983 million] of insured losses in today’s values, of which more than 50 percent was attributed to auto damage. “

“Regionally-based insurance companies with business in hail-exposed areas will particularly benefit from the addition of HailCalc Europe, with its capability to quantify hail-related risk to commercial, industrial, residential, agricultural, and auto lines of business,” commented Reinhard Maeger, executive director at Aon Re Hamburg. “Aon has been intensively using HailCalc Europe over the past two years to run analyses for its client base in Europe.”

RMS explained that HailCalc Europe “originated from research into the relationship between radar measurements and hail losses in Switzerland in 1999.” The developers collaborated with Swiss Re to extend the methodology across eight European countries, blending their innovative methodology with Swiss Re’s wealth of expertise and large volume of claims data to derive damage functions. “The development of the first probabilistic hail model for Europe enabled Swiss Re to estimate the hailstorm risk faced by the insurance industry much more accurately than ever before,” noted David Bresch, head of atmospheric perils at Swiss Re.”

RMS also noted: “The acquisition of HailCalc Europe complements the RMS® Europe Windstorm Model, which was upgraded and expanded in 2006 to include 12 countries as well as a separate high-frequency component to capture wind-related losses from severe thunderstorms and downbursts in addition to extra-tropical cyclones. The combination of the two models will uniquely enable RMS clients to assess their windstorm risk from key sources of potential storm loss.”