Applying a Loss Modification Factor

Touchstone enables you to apply a loss modification factor directly to ground-up losses produced by AIR models. This function enables users to perform sensitivity analyses on potential portfolio losses.

The loss engine scales the entire ground-up distribution, not just the mean loss, and applies all policy conditions to the modified losses. It does not cap the modified losses at the total insurable value (TIV). Any loss modification factor that is applied to losses from a peril applies also to losses generated by the respective sub-perils.

Users, such as researchers, whose application roles are system administrator or business unit administrator, create loss modification templates in the Administration Console or when creating a new catastrophe peril analysis. The loss modification templates define the rules for applying the loss modification factor. The researcher may use this function to try out multiple loss adjustment factors for a particular model. When modeling portfolios, non-administrative users, such as analysts, select from the list of recommended loss modification templates in the Analysis Settings pane. They can view the templates, but they cannot modify the templates unless they have the appropriate application role.

Note:

Administrative users can create loss analysis templates that specify loss modification options.

The loss analysis results can include the original AIR results and the modified results; you can choose not to include the AIR loss results.You can use the modified losses in Loss Group, Marginal Impact, and CATXOL analyses. You can export loss results to company loss files (CLFs), to CSV files, and to databases. The loss databases contain the modified results. The analysis logs include the loss modification rules defined in the template and the number of affected locations.

Procedure

To apply a loss modification factor:

  1. Create a new catastrophe peril analysis.
  2. In the Analysis Settings pane, navigate to the Flexibility area.
  3. In the Loss Modification Factor list, select a template or leave the default (None).

    If you have administrative privileges, you can click and create a new Loss Modification template.

  4. [Optional] Select a baseline analysis.
  5. [Optional] Leave the Include standard AIR Detailed Loss Analysis Result check box selected (the default) or clear the check box if you do not want to generate the standard AIR detailed loss results in addition to the modified loss results.