With the recent announcement that Perils has taken over responsibility for the ongoing management of the Cresta Secretariat, GR spoke to Eduard Held, head of products at Perils, about how the facility has evolved, its relevance given current market developments and where opportunities to expand its remit might lie
The drive to create more standardised processes and data formats is perhaps greater than ever before. The market-wide push for enhanced efficiency, improved performance and faster data transfer are all adding momentum, while the transition to an increasingly digitised operating environment is making standardised data essential.
For over 40 years, Cresta (Catastrophe Risk Evaluation and Standardising Target Accumulations) has offered up a global and standardised basis for the exchange of aggregated underwriting information on natural hazards, while always maintaining confidential single policy information. Set up in 1977, as an independent body under the stewardship of Munich Re and Swiss Re, it provides globally accepted aggregation zones that span over 130 countries.
On 9 September, it was announced that management of the body would transfer to Perils, the Zurich-based provider of industry-wide catastrophe insurance data.
Cresta is a natural fit for the organisation, according to Eduard Held, head of products at Perils. “Our mission from the start has been to boost transparency and the availability of high-quality catastrophe-related data to help improve the market’s understanding of natural perils. I believe that this positions us well to take the helm of the Cresta Secretariat and to seek opportunities to further develop the Cresta standard.”
For Perils, the Cresta standard has been a foundational component of their data processing since it launched in 2009.
“The standard is essential for Perils,” Held explained, “as it provides the base format for collecting insured exposure and loss data from insurance companies and for creating the market-wide data used for portfolio benchmarking, model validation, visualisation and for industry-loss-based transactions.”
Cresta currently provides approximately 250,000 high-resolution zones around the world – a figure that rose from 43,000 zones in 2013 following a significant enhancement of the standard in an effort to allow users to conduct more details analysis. The move saw a shift in the zoning process from one based on the existence of the hazards themselves to one based on political boundaries including post-code districts and administrative zones.
As the Cresta zones have become increasingly integrated into the industry’s data exchange processes for natural hazards, its remit has also expanded, Held noted. “One area in which the Cresta format has become increasingly indispensable is for risk accumulation control, as well as becoming a critical component in risk modelling,” he said.
Recent years have seen a significant advancement both in terms of the quality and granularity of exposure data that is available in tandem with increasing integration of digital technologies that are enabling re/insurers to better capitalise on this higher-resolution data. Such developments, Held believes, are serving to enhance the importance of the Cresta standard.
“There is no doubt that the developments that we are seeing on both the data and the digitalisation front are boosting the relevance of Cresta’s data sets,” he stated. “As we take over the ongoing management of the Secretariat, our role will not only entail the ongoing management but also looking at ways in which we can build on the capabilities which it currently enables.”
While it is still too early to give any details on what that building out might involve, there are a few areas where Held sees potential to expand and enhance the Cresta offering.
“We are still looking to define how to build out the Cresta capabilities”, he said, “but areas such as enhancing the use of digital capabilities, increasing geo- and business resolution, and looking at opportunities to create additional tools and services related to risk management and geographical data handling certainly, offer up possible avenues for development.”