What’s different about Sigma program management?

  • In-House Modeling Capabilities (RMS)
  • Highly Automated Systems
  • Technology Tools
  • Highly Specialized Underwriting Staff

In-House Modeling Capabilities (RMS/Risk)

Many of our producers often ask: “Why does Sigma ask for so much information?”

Well, the answer to that lies in part with the “Hurricane Risk Modeling” process. As part of the underwriting process, Sigma models each account prior to quoting using hurricane modeling software to accomplish the following:

  • Measure individual account impact on our portfolio
  • Distribution Management – County / Zip level
  • Establish operational metrics

Secondary modifiers are considered to reflect mitigation factors such as:

  • Roof Geometry – Hip, Gable, Flat, etc.
  • Construction age – Pre 1995, 1995-2001, or 2002 and newer
  • Roof Age – 0 up to 5 years,  5 up to 10 years, or 10+ years
  • Roof Type – Tile, Metal, Asphalt Shingle, Wood Shingle, Built-up or Membrane
  • Hurricane Protection – Impact Glass or Hurricane Shutters
  • Construction Class – Frame, JM, NC, MNC, Fire Resistive
  • Occupancy Class – Apartments, Condominiums, Offices
  • Roof Anchorage – Hurricane Straps, Clips

Risk Distribution:

  • Location – Risk is identified to zip or street level resolution / Geocoding
  • Accumulation – Modeling assists in over accumulation
  • Reinsurance impact – Proper risk distribution impacts reinsurance costs

Program Metrics:

Modeling each risk to a 100 or 250 yr. Stochastic storm event will provide the accounts Average Annual Loss or the predicted Hurricane loss.  Sigma adds each written account to a portfolio of written risks that determine the Probable Maximum Loss with some certainty of a catastrophic event, such as a hurricane. The metrics of the portfolio are reported to our partners on a monthly basis.

Highly Automated Systems:

  • Thin Client – Browser-based policy quoting and issuing system
  • Remote access
  • National clearance capability
  • Quotes and policies e-mailed in a highly compressed .PDF format suitable for easy transfer to most imaging systems.

Technology Tools:

  • Sinkhole exposure evaluation
  • Property valuation software
  • Extensive use of MS Office products
  • Location mapping programs

What is a Company Roof Update?

A roof update shall mean when the “roof covering” metal, tile, built-up, single-ply, or any other type of roof covering is completely replaced to meet current applicable roofing codes.

Common underwriting terms you will hear from our underwriters.

What is “AAL”?

Average annual loss is an estimate of the amount of premium required to balance catastrophe risk over time after deductible and reinsurance have been applied.

What is “PML”?

Probable maximum loss represents a probabilistic approach and yields a smaller loss estimate under the most unfavorable circumstances. In a great disaster, few risks will exceed the PML, a greater number will be at or near the PML, but the majority will be less than the PML. The aggregate of all PML losses is conservative if the PML evaluation is properly factored.

What is a “Portfolio”?

A set of accounts analyzed together. The user decides the criteria for accounts included in the portfolio. Typical portfolios include all accounts for an insurer, geographic region, agent/producer, or single reinsurance treaty structure.

What are “Metrics”?

A metric is part of a system of parameters, system of measurement, or a set of ways of quantitatively and periodically measuring, assessing, controlling or selecting a person, process, event, or institution, along with the procedures to carry out measurements and the procedures for the interpretation of the assessment in the light of previous or comparable assessments.

What is “Secondary Structural Characteristics (AKA-Secondary Modifiers)”?

Characteristics of a structure other than the primary characteristics, such as year of upgrade, soft story, setbacks and overhangs, torsion, cladding, and so on.

What is “Storm Surge”?

Quickly rising ocean water levels associated with windstorms that can cause widespread flooding. Ultimate height of the “storm tide” is a continuation of the astronomical tide and surge. The worst effect of a surge is bringing storm-whipped waves far inland. The faltering of the waves causes more damage than high water alone. The amount of surge depends on a storm’s strength, the path it is following, and the contour of the ocean and bay bottoms as well as the land that will be flooded.

What is a “Modifier”?

Any factor used to adjust the basic classification damageability attributes of a specific risk.

What is “Construction Class”?

Construction class is a factor that affects potential damage and is highly recommended for RiskBrowser analyses.

What is “Facultative Reinsurance”?

Procedure by which insurance companies reinsure risks on an individual basis. The reinsurer has the option to accept or decline each risk.

What is “Geocoding”?

Geocoding is the process of finding the latitude and longitude of a location based on its address, city, or postal code. The highest level of geocoding is finding the latitude and longitude for an exact address–exact coordinates, building location, or street address–this is called high-resolution geocoding. Lower levels of geocoding are also available. For example, ZIP Code level geocoding finds the latitude and longitude of a ZIP Code centroid (the approximate “center of gravity” for the distribution of insured value in a ZIP Code). Geocoding is required in order to perform hazard data lookup on locations and DML analyses on accounts. Low resolution geocoding–meaning ZIP Code and lower–is sufficient for DML loss analyses but high-resolution produces more accurate results.

What is “Occupancy type”?

Occupancy type is highly recommended for RiskBrowser analyses. When construction class is unknown, occupancy type is used to infer the expected construction class based on regional databases of building inventory information.

What is “ZIP-Code Centroid”?

The approximate “center of gravity” for the distribution of insured value in a ZIP Code. Where information about that distribution is available, RMS has “weighted” the centroid toward higher concentrations of exposure. If more value is focused in one corner of the ZIP-Code area, the centroid gravitates in that direction. Where no information is available, the centroid may be the “unweighted,” geographic center of the ZIP-Code area.

What is “TIV”?

Total Insured Value. Sum of all values for the peril specified.

What is “Saffir-Simpson Scale”?

Scale commonly used to measure windstorm intensity. Uses a range of 1 to 5, with 5 being the most intense storms. Named after Robert Simpson and Herbert Saffir.

What is “Catastrophe Reinsurance”?

Excess of loss reinsurance which, subject to a specified limit and insurer retention, indemnifies the ceding company for the amount of loss from all accounts in a portfolio, net of facultative, quota share, surplus share, and working excess reinsurance in a single event. The actual reinsurance document is referred to as “a catastrophe cover”.

What is “Cede”?

Buy or effect reinsurance. The transfer of all or part of one insurer’s liability to a reinsurer.

What is “Treaty Reinsurance”?

An agreement between the ceding company and the reinsurer, usually for one year or longer, which stipulates the technical particulars applicable to the reinsurance of some class or classes of business. Reinsurance treaties may be divided into two broad classifications: a) the participating type which provides for sharing of risks between the ceding company and the reinsurer; and b) the excess type which provides for indemnity by the reinsurer only for loss which exceeds some specified predetermined amount.

What is a “GUT Renovation” or “Effective Date of Construction”?

The “gut rehab” is a complete and total renovation of a building or house. Buildings that have been gut renovated have everything in the building or house replaced with the exception of the actual framed structure itself; “Down to the bare walls.” New wiring, electrical services, plumbing, windows, doors, heating cooling systems, and roof. Roof replacements must meet or exceed local hurricane code – including hurricane straps and clips where applicable.