How PCS Integrates Contributor, Verisk, and Public Data to Define Industry Losses: White

Why It Matters

Transparent, data‑driven loss estimates are critical for pricing ILS instruments and validating catastrophe models, directly influencing capital allocation in the reinsurance sector.

Key Takeaways

• PCS draws data from ~150 contributor insurers across the U.S.
• Three data sources: Contributor, Verisk, and Public data.
• Events designated when loss > $25M, market‑wide impact, many claims
• Market share adjustment scales data to admitted and non‑admitted markets
• PCS estimates now underpin ILS triggers and catastrophe‑model validation

Pulse Analysis

Verisk’s Property Claim Services (PCS) has become a cornerstone of the reinsurance and insurance‑linked securities (ILS) ecosystem. Founded in 1949, PCS evolved from a modest loss‑tracking service into a sophisticated analytics hub that feeds catastrophe bonds, industry‑loss warranties (ILWs) and model validation processes. By aggregating granular claims information from a network of roughly 150 data‑contributing insurers, Verisk’s internal claims platforms, and publicly disclosed regulator or insurer statements, PCS offers a comprehensive view of market exposure that was unimaginable in the paper‑based era of the mid‑20th century.

The PCS methodology hinges on a three‑step workflow: event tracking, designation, and loss estimation. Analysts monitor weather patterns nationwide and engage contributors for early claim signals. An event earns the PCS Catastrophe label only if it exceeds $25 million in expected loss, threatens the majority of the insurance market, and is likely to generate a significant claim volume. Once designated, PCS consolidates contributor, Verisk, and public data, applies a scaling model to account for incurred‑but‑not‑reported claims, and then adjusts for market share using AM Best data for admitted insurers and historical Verisk statistics for non‑admitted lines. This rigorous process yields a market‑wide loss figure that can be reliably used in ILS trigger calculations.

The implications for the industry are profound. Transparent, auditable loss estimates reduce basis‑risk for ILS investors and enable reinsurers to fine‑tune pricing and capital reserves. As the volume of ILW contracts and catastrophe‑bond issuances grows, stakeholders increasingly demand insight into the underlying calculations. PCS’s publicly released methodology not only satisfies regulatory scrutiny but also strengthens confidence in the data that underpins multi‑billion‑dollar risk‑transfer transactions, positioning Verisk as a trusted data partner in a data‑centric insurance landscape.