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April 3, 2002
On March 15, 2002, EQECAT, Inc. was awarded a contract to develop the earthquake loss costs for the Workers' Compensation Insurance Rating Bureau (WCIRB) of California. The loss costs are to be incorporated into their rate filing later this year. The September 11, 2001 terrorist attacks compelled insurers to review the catastrophe loss potential of Workers' Compensation Insurance over a more comprehensive range of vulnerabilities including earthquakes, which like terrorist attacks, occur without warning and can cause mass destruction.
EQECAT, an ABS Consulting company, provides insurers with a way to quantify and manage their risk more accurately. EQECAT was selected because of their state-of-the-art earthquake model and their demonstrated success in numerous rate filings and securitizations. EQECAT's earthquake model successfully passed rigorous public and scientific review during the CEA rate filing process. The earthquake model was reviewed by USGS, CDMG, several intervenor groups and independent engineering organizations under the supervision of an Administrative Law Judge of the State of California and was declared "State of the Art."
"This was one of the most important reasons why we selected EQECAT" said David Bellusci, Senior VP and Chief Actuary of WCIRB. "We knew that their model had passed extremely rigorous independent reviews and that gave us a strong feeling of confidence in the quality of EQECAT's modeling capabilities".
The project advances the state-of-the-art for modeling Workers' Compensation earthquake losses by integrating a unique set of databases to resolve many of the problems that limited the usefulness of previous modeling efforts. EQECAT leverages a variety of proprietary and publicly available databases to enable vastly improved loss estimates by worker classification. The data used includes building stocks and employment data by ZIP Code, historical earthquake injury rates and historical insurer losses by injury type based upon thousands of Workers' Compensation claims.
"We believe that EQECAT is doing the most comprehensive assessment of Workers' Compensation risk due to earthquake ever undertaken", said Dr. Mahmoud Khater, SVP and Chief Technology Officer of EQECAT. "This model will enable insurers and reinsurers to more effectively rate and manage their Worker Compensation earthquake exposure."
EQECAT now offers insurers the most advanced technology for quantifying Workers' Compensation exposure to earthquakes for both rate-making and exposure management.