The Learning Zone

The Learning Zone

The Learning Zone 675 449 Ben Gruber

When you’re underwriting a company, you might ask yourself:

  • Which Litagion® agent exposures are most likely to produce future liability claims for the company I’m underwriting?
  • Which Litagion agents drive catastrophic financial risk for the company?
  • Where should I place my layer to reduce tail risk?

CoMeta’s Company Underwrite Mode is the place to come for answers to these questions and many more.

  • To access “Underwrite Mode.” you must first select a company.  When you log onto CoMeta, click on “Event Set” at the top of the page and then on “Companies,” which will bring you to the Company Profiles page. Type the name of the company you’re underwriting into the search bar.
  • Let’s say you wish to underwrite a Fortune 500 food company we’ll refer to as ACME Food Group, Inc. and are curious what latent casualty risk may exist for that company.  From the Company Summary page for ACME Food Group, Inc., scroll down beneath ACME’s Dartboard chart to the “Projected Loss” section and click on “View Details.”


  • This will bring you to “Explore” mode, which is the default setting in UW Mode.  Here you can see the Exceedance Probability (EP) curve for ACME Food Group, Inc. You can understand the likelihood, magnitude, and drivers of tail loss for ACME Food Group, Inc. from the EP curve. The projected loss amounts are on the x-axis and probability of exceedance on the y-axis.  The EP curve can be read to give the probability of loss exceeding a specific amount occurring.




  • You can see the EP curve along four different measures of loss and triggers: All Future Losses, Claims Made, Integrated Occurrence, and Occurrence.
  • The Future Losses numbers underneath ACME Food Group, Inc.’s EP curve represent payments made to settle all future latent BI claims resulting from ACME Food Group, Inc.’s past commercial activities – up to and including the current policy year – to which a policy issued in the current policy year has the potential to respond. Future losses do not account for insurance.  Claims Made, Integrated Occurrence, and Occurrence each account for insurance based on the specified policy form.
  • To understand the drivers of loss, we’ll focus on the Future Losses PML(5) measure, which represents ACME Food Group, Inc.’s probable maximum loss at the 5% level. Translated into a projected dollar amount, this means that there is a 5% chance that all future losses resulting from latent BI claims for ACME Food Group, Inc. would be equal to or greater than $601.7 million.
  • You can see the Litagion agent contributors to the PML(5) value on the right.  They are ordered by contribution to the PML(5) value for that company. By hovering over the agents, you can see that diisobutyl phthalate (DIBP), bisphenol A (BPA), and arsenic are the largest marginal contributors to ACME Food Group, Inc.’s tail loss at $421.8 million, $117.5 million, and $70.6 million respectively.  Removing or excluding DIBP, BPA, or arsenic would reduce the PML(5) value by the amount of their respective contributions.
  • Next we will see how different underwriter actions, such as changing attachment points, adding exclusions, or changing trigger type can impact the amount of expected insured loss.  
  • Clicking the yellow “Underwrite” rectangle brings you into Underwrite Mode.  The word “Underwrite” will be replaced by policy terms when you click it (default is 100% part of $1B xs $0, integrated occurrence).  Click the rectangle again to change these terms.
  • You might want to start by entering in the terms as they are in your submission.  For example, imagine you are interested in a 10% part of $25M xs $10M policy written on the occurrence form.  Enter these terms and click “OK.” Then click “Preview” to update the EP curve.




  • The picture above shows the new EP curve results after updating the policy terms and clicking preview.  The orange box shows the Expected Loss, which is $400K. However, the 1 in 20 (PML5) is a full limit loss.  Perhaps this is unacceptable. Remembering DIBP was contributing heavily to ACME Food Group’s tail, let’s try excluding it by unchecking the box next to diisobutyl phthalate.  If exclusions are a nonstarter for this insured, this could also be thought of as the modeled loss net of ceded named peril facultative reinsurance for DIBP, if this option exists.




  • Excluding DIBP from the EP curve has a significant impact on the modeled EL and tail, as we can see from the above chart.  However, if exclusions or named peril fac are not options, and the risk is still unacceptable, you can try adjusting the attachment point to attach above where most of our event set is expected to hit ACME Food Group, Inc.  Let’s check diisobutyl phthalate to turn the exposure to that Litagion agent back on and try a different layer, such as $25M xs $60M.

  • Attaching at $60M puts the excess policy above where all but the worst latent mass actions (LMAs) ACME Food Group, Inc. are expected to settle.  The 1 in 20 is $130K, and only at the 1 in 100 do you have a full limit loss. As you can see, Company Underwrite Mode in CoMeta is a powerful tool for any excess casualty underwriter.