KCC releases US SCS Model Version 4.0

Karen Clark & Company (KCC), a provider of catastrophe risk modelling solutions, has released Version 4.0 of its US Severe Convective Storm (SCS) Model.

In the US, SCS losses dominate annual weather-related insured property losses. KCC noted that many reinsurers and ILS investors still rely on older catastrophe modelling technology, which does not provide credible loss estimates for SCS and often produces large swings in results.

To address this, KCC scientists developed a physics-based model designed to consistently and accurately capture the complexities of these storms.

The KCC model is built on high-resolution 4D physical models of the atmosphere rather than statistical extrapolations of historical data. It incorporates all atmospheric variables that drive SCS to produce high-resolution footprints for hail, tornadoes, and straight-line winds.

With Version 4.0, KCC has further enhanced location-level loss estimates, particularly for the hail sub-peril.

The model’s advanced technology has been validated with tens of billions of dollars in insurer claims data. It provides daily, high-resolution hail and tornado/wind footprints that insurers use to estimate claims and losses by day and event, as well as aggregated by month and year. Through the KCC LiveEvents process—which also provides industry loss data—re/insurers can independently verify the model’s accuracy.

The update also introduces additional secondary building characteristics that improve the precision of loss estimates for both hail and tornado/wind sub-perils, along with explicit support for Roof Actual Cash Value endorsements.

Karen Clark, KCC Co-Founder and CEO, said, “The KCC SCS model provides the accuracy and stability that reinsurers and ILS investors require to confidently offer capacity for this peril, which dominates weather-related claims in the US.

“Along with traditional applications such as pricing and underwriting, the KCC SCS model provides the mechanism for innovative modelled loss trigger (MLT) transactions—hybrid reinsurance contracts that sit between indemnity and pure parametric deals.”

Glen Daraskevich, KCC Senior Vice President, added, “As with all KCC models, changes to the loss estimates are fully transparent and serve to fine tune the losses by geography and other location-specific variables.

“Because of more advanced and modern technology, KCC model updates do not produce volatile changes in loss estimates and are not disruptive to pricing and underwriting decisions and strategies.”