Statement of values (SOV)
A site-by-site declaration of an insured's exposed values and their characteristics, which serves as the basis for the premium, accumulation control and modeling.
The statement of values is the document in which an insured declares, for each of its sites, the values exposed, buildings, contents, stock, business interruption, with their address and construction and occupancy characteristics. It serves three purposes at once: it grounds the premium, it lets the insurer measure its accumulations by zone, and it feeds the catastrophe models. Its quality is the first source of error in a model, ahead of any choice of method: a badly geocoded site, a missing construction class or an underestimated rebuilding value produce an exact price for a risk that does not exist. Undervaluation is also paid for at the time of loss, since it triggers the average clause. The underwriter who reads a statement of values therefore reads it as data to be checked, not as an established fact.
The Thai floods of October to December 2011 submerged several industrial estates north of Bangkok for weeks, where electronics and automotive plants were concentrated, including Western Digital's hard drive factories. Insured losses, estimated at more than ten billion dollars, revealed accumulations that insurers' exposure data had not located.
Follow the research
One letter a week. First, the week's underwriting note, when one is published: a dated, argued decision, signed by Paul Bernardski. Then what the observatory published on cyber risk, political risk and insurance. No account, no tracking.
No spam, one-click unsubscribe, no data ever sold.