Distributing Losses to Excess Layers

When configuring a non-catastrophe peril analysis, you can use Verisk Analytics ISO Property Size-of-Loss Database (PSOLD), which must be licensed, to distribute non-catastrophe primary expected losses into appropriate excess layers when your exposure data has contract excess or blanket limits or if you plan to apply excess per-risk reinsurance. The curves are based on 20 years of U.S. claims data that has been reported to ISO with loss details linked to exposure data by amount of insurance (AOI), state, occupancy, coverage, peril, etc. It combines detailed distributions in an appropriate mix that reflects location-level ground-up losses. You can scale the curves to account for construction and protection, and you can produce frequency and severity measures in each layer to compare to actual experience. You can use this option with either method of loss calculation, as described in the "Selecting the Method of Calculating the Ground-up Losses" Help topic.

When configuring analysis settings for a non-catastrophe peril analysis or when creating or modifying a loss analysis template, you can select the Distribute Losses to Excess Layers check box. Then, configure the following fields related to distributing losses to excess layers:


Field	Description	Can Include in a Template?
Coverage Form (Commercial Only)	Specifies the type of coverage that you want to use for this non-catastrophe peril analysis. Select one of the following options: Buildings plus contents Buildings plus contents plus time element	Yes
Loss Trend - Commercial	Specifies the dates for commercial loss trends, as well as an annual trend factor, for this non-catastrophe peril analysis. To specify a commercial loss trend, click the down arrow in the Trend To field and select the desired end date for this commercial loss trend. Then, enter the desired commercial annual trend factor in the Annual Trend Factor field. Note: The Trend From value is based on the vintage of the loss data and cannot be modified.	Yes
Loss Trend - Residential	Specifies the dates for residential loss trends, as well as an annual trend factor, for this non-catastrophe peril analysis. To specify a residential loss trend, click the down arrow in the Trend To field and select the desired end date for this residential loss trend. Then, enter the desired residential annual trend factor in the Annual Trend Factor field. Note: The Trend From value is based on the vintage of the loss data and cannot be modified.	Yes
AOI Trend	Specifies the Amount of Insurance (AOI) trend for this non-catastrophe peril analysis. This set of fields enables you to trend the replacement values of exposure data without changing the data. To configure an AOI trend, specify values for the following fields: In-Force Date Specify the beginning of the time period that Touchstone should use in the trend calculation. Avg. Policy Date Specify the end of the time period that Touchstone should use in the trend calculation. AOI Trend Factor Specify the factor that Touchstone should use to trend the replacement values. AOI Adjustment Factor Specify the trend adjustment factor that Touchstone should use to trend the underlying 60 AOI bands.	Yes
Percent Cap (Homeowner)	Specifies the percentage that Touchstone should use as a cap on the Limited Average Severity calculation for homeowner's exposure for this non-catastrophe peril analysis. Enter the desired percentage.	Yes
Percent Cap (Commercial)	Specifies the percentage that Touchstone should use as a cap on the Limited Average Severity calculation for commercial property exposure for this non-catastrophe peril analysis. Enter the desired percentage.	Yes
Selected PSOLD Scaling Factor	Specifies the scaling factor that Touchstone should use to scale the means that underlie all the PSOLD calculations. Enter the desired scaling factor.	Yes
Countrywide Override	Specifies whether Touchstone should attempt to fill in gaps in exposure data for locations that have no matches in the underlying PSOLD. To use a countrywide override, select this check box. If you select this check box, for every location in the exposure that has no matches in the underlying PSOLD, PSOLD attempts to fill in the gaps. There are two override levels. The first override replaces the selected state with the countrywide curve. If the countrywide curves still generates no matches in the underlying database, the second override additionally replaces the occupancy with all the occupancies in the peer group of the selected occupancy. If you do not want to use a countrywide override, clear this check box.	Yes
Home Owners Form	Specifies which homeowners' form(s) you want to use for this non-catastrophe peril analysis. Select one of the following options: Broad, Special (Forms 2, 3) Comprehensive (Form 5) Both	Yes
Deductible Settings	Specifies which deductibles to use for this non-catastrophe peril analysis. Select one of the following options: Exposure Data Deductibles Use Net values for all Locations Use no Deductibles	Yes
Save PSOLD Parameters	Specifies whether you want to save the PSOLD parameters for this non-catastrophe peril analysis as a comma-separated values (CSV) file. To save the parameters, select this check box and then enter the desired path and file name (and `.csv` extension) for the PSOLD parameters file. Alternately, click Browse, specify the desired location and name for the PSOLD parameters file, and click Save. If you do not want to save the PSOLD parameters, clear this check box.	Yes

Note:

You can create and edit loss analysis templates to specify default settings for detailed loss analyses. When you create or edit a loss analysis template, you can specify any of the settings indicated in the table above to include these settings in a loss analysis template. For more information about loss analysis templates, see the "Loss Analysis Template" Help topic.