Catastrophes
The term catastrophe in the property insurance industry denotes a natural or
man-made disaster that is unusually severe, such as an earthquake or a hurricane. The
industry designates an event a catastrophe when claims are expected to reach a certain
dollar threshold and the catastrophe affects more than a certain number of policyholders
and insurance companies. Insurers monitor the extent and type of these losses, dates of
occurrence, and geographic areas affected by the catastrophe-related claims to forecast
loss estimates and loss reserves. Insurers often group claims by the catastrophes that
caused them. This helps the insurer to do the following:
- Estimate the severity of the catastrophe itself and its potential liability due to the catastrophe
- Estimate the reserves it must set aside to cover future claims from the catastrophe
- Manage its resources, such as mobile adjusters, in responding to the catastrophe
- Create reports about the catastrophe and its financial consequences for the insurer
ClaimCenter defines a catastrophe by the following characteristics:
- A date range: Start and end date for the catastrophe
- A geographic region, or catastrophe zone
- One or more perils: Combination of a Loss Type, such as property, and a Loss Cause, such as wind
This topic provides a high-level overview of catastrophes, discussing both what they are and how to work with them through the system APIs. Read this topic to learn how to create and modify catastrophes so that users can associate claims with them and administrators can manage them in ClaimCenter.
For a more detailed discussion of the business functionality of catastrophes, refer to Application Guide.