Invalid Construction/Occupancy Pairs

You configure the handling of invalid construction/occupancy pairs through the Financial Settings parameter.

Construction and occupancy codes are included in location-level exposure data. The loss analysis engine uses the codes to determine which damage functions to apply for each location. Therefore, it is important for the engine to use the correct set, or pair, of codes. An example of an invalid pair is when an AIR model does not accept a location's construction/occupancy pair for a peril specified for the location.

You can configure the loss analysis engine to behave in either of the following ways when it encounters an invalid construction/occupancy pair in the exposure data:

• Ignore: The loss engine omits from the analysis all locations that have construction and occupancy combinations that are invalid based on region/country, model, and/or peril. In this case, Touchstone does not produce loss for these locations. To identify locations that were not included in a loss analysis, check the analysis log.

• Use System Default: During a Detailed Loss Analysis, Touchstone remaps invalid construction and occupancy code combinations using one or more of the following construction and occupancy class codes, as applicable. In Touchstone 6.0 and later, when you select this option, Touchstone uses this option for each model individually within the analysis. In previous versions, Touchstone used this option when the construction/occupancy combination was invalid for all models within the analysis.

• Unknown construction (100)

• General commercial occupancy (311)

Touchstone does not remap construction and occupancy codes for offshore locations, as all combinations of offshore asset construction and occupancy are valid. However, make sure that you do not accidentally assign an onshore construction or occupancy code to an offshore location.

In some models, the construction and occupancy class code combination 100-300 is not valid, and Touchstone remaps this combination to 100-311. However, for exposures in South America, the construction and occupancy class code combination 100-300 is valid, and Touchstone does not remap this combination.

During an analysis, upon identifying a location with an invalid construction and occupancy code combination, Touchstone remaps the affected construction and/or occupancy codes by performing one of the processes listed in the following table for each model involved in the analysis:

Construction Code Valid?	Occupancy Code Valid?	Remapping Process
Invalid for model	Valid for model	1. Touchstone remaps the construction code to unknown construction (100). The construction and occupancy codes are each now valid for the model involved in the analysis. 2. Touchstone checks whether the construction code (100) and occupancy code are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the occupancy code to general commercial occupancy (311).
Valid for model	Invalid for model	1. Touchstone remaps the occupancy code to general commercial occupancy (311). The construction and occupancy codes are each now valid for this model. 2. Touchstone checks whether the construction code and occupancy code (311) are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the construction code to unknown construction (100).
Invalid for model	Invalid for model	1. Touchstone remaps the occupancy code to general commercial occupancy (311). The construction and occupancy codes are each now valid for this model. 2. Touchstone checks whether the construction code and occupancy code (311) are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the construction code to unknown construction (100).
Valid for model, but incompatible with occupancy code	Valid for model, but incompatible with construction code	1. Touchstone remaps the occupancy code to general commercial occupancy (311). The construction and occupancy codes are each now valid for this model. 2. Touchstone checks whether the construction code and occupancy code (311) are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the construction code to unknown construction (100).

When there are invalid pairs, you may see the same loss numbers in a portfolio/multi-peril analysis whether you select the “Ignore” option or the “Use System Default” option. This is because, if the loss analysis includes a model for which a location’s construction/occupancy pair is valid, Touchstone does not remap the codes. (If you run a single peril, the "Use System Default" option does remap the construction/occupancy code for the peril if the code is not valid for that peril, and so it will produce loss results.)

The Detailed Loss Analysis log contains information about validation and remapping that occurs before and during the loss analysis. The Financial Model Options section in the log specifies the settings used during the analysis. To view information about invalid pairs, search for "Remap Construction code" in the analysis log.

Here's an example of a log entry for an invalid pair, where the setting was "System Default," "US" is the contract ID, and "PharmacyX" is the location. In addition, if the loss analysis engine determines that construction code B is invalid, then it will use construction code A.

Remap Construction code A remap from 105 to 100 Construction code B remap from 105 to 100 Occupancy code remap from 307 to 311 for (ContractID,LocationID):