Alesco Risk Management Services has chosen Palisade's risk analysis tool, @RISK, in its approach to optimising insurance spend and identifying alternative future strategies for the financing and transfer of key risks.
This helps its clients in the global energy industry develop informed risk management tactics and delivers significant value to all aspects of the business.
Alesco uses @RISK to design models that forecast future insurance losses.
This enables alternative insurance structures to be tested to see how different balances of business unit retention (usually a deductible or excess on the policy that will be applied before any insurance claims is made), captive retention and, beyond that, commercial insurance, affect premium levels and capital requirements.
According to Palisade, the objective is to find the optimal structure that balances an acceptable premium cost with the client's financial ability to retain risk, and its appetite to do so.
Having first worked with the client to undertake a detailed loss forecasting exercise, the next step is to determine how much risk a client should retain with its captive.
"The introduction of regulation such as Solvency II and other risk-based capital approaches generally requires this type of risk modelling to validate and support capitalisation levels," explained Derek Thrumble, partner at Alesco.
"Palisade's @RISK makes it quick and simple to run Monte Carlo simulations directly in Excel, thereby avoiding the need to build complex models with thousands of rows of data and code.”
“As a result we can undertake complex forecasting for our clients within a realistic time-frame to influence decisions that meets their corporate, financial and legal requirements and determines the insurance strategy that is the best fit for them at that time."
