Insurtech Praedicat develops new tool for COVID-19 liability risk in Lloyd’s Lab

Insurtech  Praedicat has developed a suite of scenarios for the casualty market that allows insurers to track exposures, establish reserves, and manage aggregations for emerging risks such as the COVID-19 pandemic.

The new liability insurance tool was created in the insurtech incubator Lloyd’s Lab, working with mentors from Argo, Hiscox, StarStone and Lloyd’s.

The scenarios are designed to help insurers that have a clash risk from COVID-19 that impact general liability and directors & officers (D&O) lines within an insurer’s portfolio.

Clash refers to the circumstance where a single underlying event causes multiple claims which can threaten the solvency of insurers. The coronavirus creates clash risk for casualty insurers both within and across lines of insurance.

Praedicat has applied previous mass litigation precedents to anticipate how COVID-19 liability could develop. These new clash scenarios include loss estimates allocated to companies that might be named in litigation and also to the insurance line that would cover the loss, allowing insurers to estimate exposure in their own portfolios.

The scenarios complement Praedicat’s COVID-19 litigation tracker, allowing insurers to anticipate the ultimate effect of novel pandemic litigation emerging in the US courts.

“This is a hugely exciting development for Praedicat and for the market,” said Robert Reville, chief executive officer of Praedicat. “The liability risk relating to COVID-19 is front of mind in the global insurance and reinsurance market right now. We are proud to have had the support of the Lloyd’s Lab to develop these capabilities for the industry.”

Emma Watkins, head of exposure management for Lloyd’s, who also worked with Praedicat as a mentor, added: “For the insurance industry to maintain its critical role in facilitating recovery from catastrophes it is vital that emerging and clash risks are fully understood by the market and the insured. We appreciate Praedicat’s efforts to help the industry with this novel emerging risk.”

Additionally, the company has created a multi-line scenario analysis feature in its software, CoMetaâ, to facilitate business decision-making.

Restell said: “By utilizing these new cross-line clash scenarios and model capability, clients are able to estimate potential exposure and develop underwriting strategies. They can also create new innovative products to mitigate future risk.”