Insurers set too much focus on PML as a risk measure. Instead, the industry should make better use of new risk measures, says Jayant Khadilkar at TigerRisk.
Many insurers are too heavily dependent on the use of probable maximum loss.
(PML) as their key risk indicator. Instead, they should be migrating to the use of risk measures, better tailored to the unique needs of individual companies.
That is the view of Jayant Khadilkar, head of analytics at broker Tiger Risk. He argues that the key stakeholders in the industry – including risk takers, regulators, rating agencies and brokers – must accept that no two companies are alike when it comes to their catastrophic risk exposures. “Every company is unique with a unique and complex set of risks,” he argues.