How do insurance carriers define CAT perils?
It depends. Some carriers may define earthquakes as a shaking or trembling of the earth that is tectonic in origin. Other carriers may expand that definition to include such things as landslides, sinkholes, mud flow and rock fall. Some carriers may look at flood as simply the rising and overflowing of a body of water onto normally dry land. Others will expand that to include surface water, rainfall and the resulting runoff. The carrier excluding coverage for earthquake and flood may use the expanded definition while the DIC may only be picking up the more limited definition creating a potential gap in coverage. How should a quality broker help a company with its insurance needs? A quality broker should explore new and improved program structures. In this market, having an all-risk excluding CAT perils tower and a separate DIC placement is not the best and most effective structure. A layered and quota-shared all-risk program including the perils of earthquake, flood and wind, opens up t
