4.4 Legal risk - Scor

6.1.3.3 Claims
Non-life
The Group's P&C Claims & Commutations function, located in its six Hubs, is in charge of the implementation and
overview of the overall claims handling policy for SCOR Global P&C, implementing worldwide control and reporting
procedures and managing commutation of portfolios and commitments.
The claims handling function is performed by the claims teams, located in Paris, New York, Zurich, London, Singapore
and Cologne, which review, process and monitor reported claims. The P&C Claims & Commutations function supports
and controls the day to day activity and takes over the direct management of large, litigious, serial and latent claims.
Additionally, periodic audits are conducted on specific claims and lines of business, and claims processing and
procedures are examined at the ceding companies’ offices with the aim of evaluating their claims adjusting process,
valuation of case reserves and overall performance. Technical and legal assistance is provided to underwriters before
and after accepting certain risks.
When needed, recommendations are given to underwriters and local management.
Life
The Group's Life claims department, located in Paris, is tasked with implementing the general claims handling policy for
SCOR Global Life, as well as worldwide control and reporting procedures and managing commutation of claim portfolios.
The claims handling function is performed by local claims teams, located among other cities in Paris, Charlotte, Zurich,
London, Singapore and Cologne, which initially process and monitor reported claims. The Life Claims Department
supports and controls the day-to-day activity and takes over the direct management of large, litigious, serial and latent
claims. Additionally, periodic audits are conducted on specific claims and lines of business. Claims processing and
procedures are examined at the ceding companies’ offices with the aim of evaluating their claims adjusting process,
valuation of reserves and overall performance. Technical and legal assistance is provided to underwriters before and
after accepting certain risks. When needed, recommendations are given to underwriters and local management.
6.1.3.4 Catastrophe (cat) Risk and Exposure Controls
SCOR manages its exposure to catastrophes through selective underwriting practices, especially by limiting its exposure
to certain events in certain geographic zones, by monitoring risk accumulation on a geographic basis and by retroceding
a portion of those risks to other selectively chosen reinsurers.
Non-Life reinsurance
Catastrophe management is split into three sections under SCOR Global P&C: portfolio accumulation, optimization and
procedures; research and development; and modeling in support of underwriting. Descriptive guidelines for each of the
main business processes are available: ‘catastrophe methodologies’, ‘data quality & modeling’, ‘accumulation control’, ,
‘Cat pricing’ and ‘system & processes’. For Cat pricing, a matrix organization described in the guidelines has been
implemented in each Hub, distributing the responsibility of Cat pricing to the Cat modelers, the pricing actuaries or the
underwriter. In addition, a system of Cat referrals has been introduced in excess of a given threshold.
For all SCOR's property business, it evaluates the accumulations generated by potential natural events and other risks.
Pursuant to the rules and procedures, Regional Managers from SCOR’s natural catastrophes risks modeling team
monitors the structure of the portfolio for each region or country and the data is consolidated under the supervision of the
Head of natural catastrophes risks modeling.
The Group tracks natural catastrophe accumulation (earthquakes, wind and flood perils…) for all exposed countries
worldwide. Depending on the region of the world and the peril in question, it uses a variety of techniques to evaluate and
manage its total exposure. The Group quantifies this exposure in terms of a maximum commitment. It defines this
maximum commitment, taking into account policy limits, as the potential maximum loss caused by a catastrophe
affecting a geographic area, such as a storm, hurricane or earthquake, and occurring within a given return period. SCOR
estimates that its potential maximum losses for catastrophes, before retrocession, come from windstorms in Europe,
hurricanes in the U.S., typhoons in Japan or from earthquakes in Japan or the U.S.
The Group makes extensive use of proprietary external models from industry-leading catastrophe model suppliers,
including Risk Management Solutions RiskLink® (“RMS”) and AIR Worldwide Catrader® (“AIR”), and licenses all the
region/peril combinations available from each vendor. In addition, it has access to local cat model expertise for Australia
from Risk Frontiers, a commercial provider of tools developed at Macquarie University. Access to multiple external
models allows the Group to better appreciate the strengths and limitations of each model and make adjustments where
appropriate, and it is well equipped with alumni from the main model providers.
Since 2011, SCOR has operationally used the RMS modelling results format as its common framework for assessing
accumulations of natural catastrophe risk, including catastrophe risk management controls (Capacity Monitoring) and
provision of data to its internal capital models, and retrocession department.
These tools enable the Group to quantify its exposure in terms of a probable maximum loss (“PML”) at various levels of
probability for each peril and geographic location. The overall aggregate annual PML per peril, allowing for potential
multiple events, provides the information required to determine the level of retrocession and other alternative risk
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