Tool Helps Insurers Identify, Quantify Terrorism Risks

Insurers looking to identify and price terrorism exposures have a new tool available from decision-data expert Oxxford Information Technology, Ltd.

Oxxford’s Vulnerability Index (www.risk-mkt-data.com), as the product is called, is powered by a proprietary geo-coded database of 28 million businesses and some 17 million locations nationwide. Oxxford introduced the tool at the Terrorism Risk Insurance Act of 2002 Conference, hosted recently in suburban Washington, D.C. by the American Insurance Association.

The index can help identify and evaluate risks for individual insureds and prospects, or for an entire book of business. That’s especially valuable as insurers seek to understand their exposures as they comply with new federal terrorism insurance guidelines. The database contains detailed information from more than 800 public and private sources.

According to Oxxford, the tool takes into account what businesses or locations might be potential targets of nearly a dozen different types of terrorism, as well as what facilities that might be used to aid terrorism—knowingly, or otherwise. “We use a scoring system for each industry,” Oxxford Founder and CEO Ray Greenhill said. “Plus, we look at individual businesses and individual sites, and at various scenarios for each.”

The Vulnerability Index quantifies, with a tested degree of accuracy, not just potential property losses at pre-scored locations, but contents losses and business interruption exposures, as well.

Data can be broken out in a variety of ways—by specific geographic area, for a specific company, or for a group of firms in a specific industry or industries—or a combination of these. The look can be nationwide, or as specific as a zip code or geographic coordinate.

In addition to identifying threats for high-risk businesses and facilities, which several risk-modeling companies do, Oxxford can determine exposures for businesses that otherwise might have lower risk, but are located near higher-risk sites, power plants, communication centers or other “target” facilities. “We can assess not only the potential for terrorism at a site, but the nearness of that site to other higher risk sites, plus the number of workers at the site,” Greenhill said. “The tool is particularly valuable at identifying and verifying tenancy in multi-office complexes—something lacking in other risk identification tools.”

The Vulnerability Index looks at international and domestic political terrorism, as well as other types, such as labor, religious, economic, cyber and several more. It also incorporates other threats, including natural disasters, environmental catastrophes and business and economic hazards.

In addition to standard demographic and vulnerability scores available for each business, a variety of additional financial, contact, and detailed risk data can be appended to individual firms or groups of businesses.