Oasis Solutions Project
The LMA Board and Lloyd’s have jointly launched the Oasis Solutions Project (OSP) which will:
- create an easily accessible, custom built user interface for Oasis which can be used by managing agents as an additional/alternative platform for catastrophe modelling
- pay for conversion of the ARA US Wind model onto the Oasis platform to provide alternative views of risk and greater choice of models
- create the opportunity for managing agents to licence the ARA model on a shared services basis at a significant discount to single licence costs and existing models. This would be the first such agreement in the Lloyd’s market for catastrophe models and would provide a template for negotiation with other catastrophe model providers in future; and
- develop standardised model validation protocols which will provide catastrophe modelling professionals with considerable support in the annual model validation exercise under Solvency II.
What is Oasis?
The Oasis Loss Modelling Framework (Oasis) is a plug and play solution that, through standardisation, will allow multiple model developers to prepare models in the knowledge that they are in a format the insurance industry has endorsed and can use immediately. We believe this will enlarge the current market place for catastrophe models and provide greater choice, a wider range of perspectives and the opportunity to streamline processes such as contract negotiation, validation and IT.
LMA Board and Lloyd’s support for OSP
Lloyd’s is a founder member of Oasis. The LMA Board has considered the proposal for the OSP and has concluded that this project has the potential to materially enhance the choice of catastrophe modelling in the market and provide a basis for future discussions around shared services costing models. Once done successfully for one model it could be rolled out for several other models.
What is the ARA model? What are the costs?
The ARA model is a well-respected, industrial strength, US Hurricane model. It is the most published and peer reviewed model available. Since 1998 it has been accepted by the American Society of Civil Engineers (ASCE) for setting national hurricane wind speed standards and is approved by the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) since 2000.
Exact pricing will be based on US property premium volume and will not be based on usage. ARA have committed to a shared services cost model and will give discounts for multiple purchase requests. Its existing pricing is already competitive compared with other options.
Benefits of the OSP
With market support, Oasis will:
- provide a choice of models that will drive down the cost of running and licensing these models
- create transparency in models for effective use
- create a vibrant marketplace for ‘un-modelled’ perils and territories
- introduce standardisation that will create further efficiency
- stimulate innovation
- support shared service contracts; and
- bring new cat model providers into the market.
The OSP has now started and managing agents have provided details of the OSP contact person at their agency to engage with the project. The project team have also held initial discussions with ARA.
Invitations to join the User Group (and relevant working groups) will be sent to all managing agents in September.