Accumulation or "clash" risk is the potential loss exposure of one event spreading to multiple lines of business in an insurer's portfolio. From construction site failures and product defects to corporate financial collapses and systemic market issues – if you aren't aware of the full breadth or extent of the risk, you aren't protected.
While accumulation is nothing new, it's becoming more widespread and pervasive due to the growing complexity of business and the faster and broader availability of information. For example, supply chains, outsourcing and an increasing reliance on data present new accumulation scenarios, which can assume unexpected forms and magnitude. According to Swiss Re's sigma experts, supply chain losses can be devastating, posing a significant challenge both to companies and to insurers. (Page 18 of sigma under "Contingent business interruption")
Large liability catastrophes, rapid technology development and, increasing scrutiny from regulators, rating agencies, investors and other stakeholders are driving the need for insurers to better understand and manage liability accumulation risks. One of the vital tools Swiss Re employs to assess the impact of these factors is our forward-looking modelling approach. We use this technique in combination with data analytics to quantify and mitigate clients' accumulation exposures across several scenarios.
These can include business disaster, classic clash, serial aggregation and systemic failure. Consequently, our extensive data sets and experience allow us to benchmark portfolios against historical events as well as forward looking scenarios.
Bespoke reinsurance solutions
Our bespoke reinsurance solutions help identify business opportunities via an active management of accumulation risk, support your growth strategy and protect your portfolio from volatility.