‘SECONDARYPERILS?’IMPACT
OFNON-MODELEDRISKSTO
THEINSURANCEINDUSTRYIN
SEASIA
Neena Saith
Director, Model Solutions
Robert M...
60% OF TOTAL
INSURED LOSSES
WERE NOT
CAPTURED BY
MODELS IN 2011
©2013 Risk Management Solutions, Inc.
3 STEPS TO GREATER RESILIENCY
Know your
exposure
Understand
scenarios
Quantify
your ...
RMS RISK
EXPOSURE
ACCUMULATION
CATALOGUE
(RMS REACT)
REACT now to
proactively manage
your non-modeled
risk
RMS Risk Exposu...
Model gap analysis
What’s in and what’s out of a cat model
BEYOND THE
MODELED
WORLD -
MISSING
SOURCES OF
RISK
SUPPLEMENTAL
CAUSE OF LOSS
Same cause of loss, same region,
supplementa...
Type 1
Additive perils to events already modeled
(‘blind spots’)
TAIWAN PERIL
AUDIT
What perils is
Taiwan exposed to?
What is and is not
modeled in Taiwan?
Non-modeled
Non-modeled
Non-mod...
SECONDARY
PERILS FROM M9
EARTHQUAKES
CLOSE TO
TAIWAN
Major Tsunamis >10m
Extreme landsliding
Strong long period ground
mot...
IMPLICATIONS
OF
MAGNITUDE 9
EARTHQUAKE
ON THE
RYUKYU
SUBDUCTION
ZONE >10m	
  Tsunami	
  
IMPLICATIONS
OF A
MAGNITUDE 9
EARTHQUAKE
ON THE MANILA
ARC
SUBDUCTION
ZONE >10m	
  
Tsunami	
  
Kaohsiung, SW Taiwan –
largest harbour in Taiwan
– c 1 million people live in
coastal districts
Frontline >10m Tsunami in
...
Extent of aftershocks
after M9 earthquakes
adjacent to Taiwan
Taiwan to same scale
LANDSLIDE
RISK
Disrupted communications expected after M9 earthquake close to Taiwan
©2013 Risk Management Solutions, Inc.
City centre looting
OTHER POTENTIAL EARTHQUAKE CORRELATIONS
Professional liability C...
©2013 Risk Management Solutions, Inc.
TYPHOON	
  SOULIK,	
  12	
  JULY	
  2013	
  
©2013 Risk Management Solutions, Inc.
TYPHOON FLOOD AND MUDSLIDE DAMAGE
Damage to buildings in Kaohsiung county (left) and...
Secondary perils – Garbage landslide after typhoon: Baguio,
Philippines 2011
Type 2
Missing extreme parameterizations
‘Hidden peaks’
RMS STUDY IDENTIFIES 15 EQ SOURCES CAPABLE OF M9+ EVENTS -
POSSIBILITY FOR DAMAGE BEYOND CURRENT MODEL PREDICTIONS
8
1
2
3...
ULTRA
LIQUEFACTION
Stress test
accumulations in
high liquefaction
potential locations
Type 3
Missing perils (in modeled countries)
‘The overshadowed’
•  Rapidly sinking delta
•  Large areas of city below sea level
•  Over extraction of groundwater
•  Poorly maintained flo...
STORM SURGE
FLOOD IN
BANGKOK
Cyclone track
2011 warning that
Bangkok “will sit under
nearly 2m of water by
2030”
Feb 11th ...
©	
  Jenkins	
  et	
  al.,	
  2012	
  
A simulated eruption from
Pinatubo:
§  VEI 6
§  Northwesterly winds
§  Ash thick...
Type 4
Non-modeled territories
‘Cold spots’
(the perils of diversi-fiction)
GLOBAL PERIL
AUDITS
Saudi Arabia
Earthquake
Urban flash flood
Oman
Cyclone (flood and wind)
Flash flood
Tsunami
Brazil
Fla...
KNOW YOUR
EXPOSURE
Determine if you are
insuring risks in
industrial clusters
Sectorial clusters of
exposure expanding
acr...
PERFORMING
A RISK AUDIT
•  Check coverages
•  Geocode everything
•  Understand the
motivations for
insurance purchase
•  E...
OWN YOUR
VIEW OF RISK
Build greater resiliency
into your risk
management
framework by
managing risk outside
the models
Kno...
©2013 Risk Management Solutions, Inc.
“Risk management, we believe, should be
about lessening the impact of events we
don’...
'Secondary perils?' Impact of non-modeled risks to the insurance industry in Southeast Asia
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'Secondary perils?' Impact of non-modeled risks to the insurance industry in Southeast Asia

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Neena Saith presented on the topic of Secondary Perils at the 11th Conference on Catastrophe Insurance in Asia, held in Taiwan on July 18-19.

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'Secondary perils?' Impact of non-modeled risks to the insurance industry in Southeast Asia

  1. 1. ‘SECONDARYPERILS?’IMPACT OFNON-MODELEDRISKSTO THEINSURANCEINDUSTRYIN SEASIA Neena Saith Director, Model Solutions Robert Muir-Wood Chief Risk Officer
  2. 2. 60% OF TOTAL INSURED LOSSES WERE NOT CAPTURED BY MODELS IN 2011
  3. 3. ©2013 Risk Management Solutions, Inc. 3 STEPS TO GREATER RESILIENCY Know your exposure Understand scenarios Quantify your risk Do I have a concentration of exposure that could be impacted? Are there scenarios that could impact multiple locations? What techniques can I use to quantify my risk?
  4. 4. RMS RISK EXPOSURE ACCUMULATION CATALOGUE (RMS REACT) REACT now to proactively manage your non-modeled risk RMS Risk Exposure Accumulation Catalogue Industrial cluster database Global tsunami zones Volcanic eruption risk Extreme liquefaction areas Asia flood footprints
  5. 5. Model gap analysis What’s in and what’s out of a cat model
  6. 6. BEYOND THE MODELED WORLD - MISSING SOURCES OF RISK SUPPLEMENTAL CAUSE OF LOSS Same cause of loss, same region, supplemental causes of loss: Hurricane Irene UNMODELED CAUSE OF LOSS Same region – separate unmodeled cause of loss: China winter storms UNMODELED REGION MISSING EXTREME PARAMETERIZATIONS Same cause of loss, same region, missing extreme parameterization: Tohoku Earthquake Cambodia Flood
  7. 7. Type 1 Additive perils to events already modeled (‘blind spots’)
  8. 8. TAIWAN PERIL AUDIT What perils is Taiwan exposed to? What is and is not modeled in Taiwan? Non-modeled Non-modeled Non-modeled Models available Models available but missing extreme parameterisation Models available
  9. 9. SECONDARY PERILS FROM M9 EARTHQUAKES CLOSE TO TAIWAN Major Tsunamis >10m Extreme landsliding Strong long period ground motions Major earthquake aftershocks
  10. 10. IMPLICATIONS OF MAGNITUDE 9 EARTHQUAKE ON THE RYUKYU SUBDUCTION ZONE >10m  Tsunami  
  11. 11. IMPLICATIONS OF A MAGNITUDE 9 EARTHQUAKE ON THE MANILA ARC SUBDUCTION ZONE >10m   Tsunami  
  12. 12. Kaohsiung, SW Taiwan – largest harbour in Taiwan – c 1 million people live in coastal districts Frontline >10m Tsunami in Manila Arc M9 EQ
  13. 13. Extent of aftershocks after M9 earthquakes adjacent to Taiwan Taiwan to same scale
  14. 14. LANDSLIDE RISK
  15. 15. Disrupted communications expected after M9 earthquake close to Taiwan
  16. 16. ©2013 Risk Management Solutions, Inc. City centre looting OTHER POTENTIAL EARTHQUAKE CORRELATIONS Professional liability Contamination liability
  17. 17. ©2013 Risk Management Solutions, Inc. TYPHOON  SOULIK,  12  JULY  2013  
  18. 18. ©2013 Risk Management Solutions, Inc. TYPHOON FLOOD AND MUDSLIDE DAMAGE Damage to buildings in Kaohsiung county (left) and Taitung county (right), Taiwan after Typhoon Morakot in 2009
  19. 19. Secondary perils – Garbage landslide after typhoon: Baguio, Philippines 2011
  20. 20. Type 2 Missing extreme parameterizations ‘Hidden peaks’
  21. 21. RMS STUDY IDENTIFIES 15 EQ SOURCES CAPABLE OF M9+ EVENTS - POSSIBILITY FOR DAMAGE BEYOND CURRENT MODEL PREDICTIONS 8 1 2 34 56 7 9 10  11   12   13  14  15  
  22. 22. ULTRA LIQUEFACTION Stress test accumulations in high liquefaction potential locations
  23. 23. Type 3 Missing perils (in modeled countries) ‘The overshadowed’
  24. 24. •  Rapidly sinking delta •  Large areas of city below sea level •  Over extraction of groundwater •  Poorly maintained flood defences New Orleans 2005 •  In the path of frequent tropical cyclone storm surges •  Home to 450,000 people •  Well-rehearsed evacuation plans HIDDEN GULF OF THAILAND STORM SURGE RISK: MANY SIMILARITIES WITH NEW ORLEANS Bangkok 2015 •  In the path of infrequent tropical cyclone storm surges •  Home to 8.5 million people •  No material evacuation plans Five typhoons have entered the Gulf of Thailand since 1950 Wind profile from TC Surge levels from TC
  25. 25. STORM SURGE FLOOD IN BANGKOK Cyclone track 2011 warning that Bangkok “will sit under nearly 2m of water by 2030” Feb 11th 2013 Deputy Prime Minister Plodprasop Suraswadi "After April we'll start studying this project full steam”
  26. 26. ©  Jenkins  et  al.,  2012   A simulated eruption from Pinatubo: §  VEI 6 §  Northwesterly winds §  Ash thicknesses ~200 mm in central Manila (for this scenario) §  Only maps thicknesses for urban areas (>400 people/km2). White cells receive no ash or contain <400 people. §  A further 4 volcanoes lie within 200 km of Manila Ash thicknesses (log scale): >10,000  mm     (10  m)   1  mm   100  mm   Pinatubo   Manila   Jenkins, S., Magill, C., McAneney, J. and Blong, R., 2012. Regional ash fall hazard I: A probabilistic assessment methodology. Bulletin of Volcanology, 74(7): 1699-1712. Jenkins, S., McAneney, J., Magill, C. and Blong, R., 2012. Regional ash fall hazard II: Modelling results and implications. Bulletin of Volcanology, 74(7): 1713-1727. Susanna.Jenkins@Bristol.ac.uk VOLCANIC RISK OFTEN OVERLOOKED!
  27. 27. Type 4 Non-modeled territories ‘Cold spots’ (the perils of diversi-fiction)
  28. 28. GLOBAL PERIL AUDITS Saudi Arabia Earthquake Urban flash flood Oman Cyclone (flood and wind) Flash flood Tsunami Brazil Flash flood Major river flood
  29. 29. KNOW YOUR EXPOSURE Determine if you are insuring risks in industrial clusters Sectorial clusters of exposure expanding across Asia
  30. 30. PERFORMING A RISK AUDIT •  Check coverages •  Geocode everything •  Understand the motivations for insurance purchase •  Evaluate the risk management culture Know your exposure Potential for Correlation Understand scenarios
  31. 31. OWN YOUR VIEW OF RISK Build greater resiliency into your risk management framework by managing risk outside the models Know your exposure Understand scenarios Quantify your risk RMS(one)/exposure analysis REACT scenarios REACT return period hazard maps Fully probabilistic loss model
  32. 32. ©2013 Risk Management Solutions, Inc. “Risk management, we believe, should be about lessening the impact of events we don’t understand” - Naseem Taleb, Harvard Business Review

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