Standard & Poor's is changing its criteria for measuring catastrophe risk for primary insurers.
The new criteria will be based on exposure, rather than premium charges, as has traditionally been the case. The new criteria will incorporate a probable maximum loss figure that is both company-specific and based on net exposures as opposed to gross figures.
The new criteria capital charge is also expected to be an aggregate probable maximum loss as opposed to an occurrence probable maximum loss. Specific details of the new criteria for primary insurers will be published no later than June 2006.
S&P is not planning to revise its criteria for reinsurers — these were last updated in mid-2005.
