Catastrophe Risk Assessment in Asia

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As Asia is progressing towards higher economic growth, opportunity knocks on the door for Insurance and Reinsurance industry. However, 2011 was an unprecedented year for the region with a record number of massive catastrophes hitting Asia. Although insured losses were much lower than the overall economic losses for the region, yet, the industry took a hard hit. All this has forced the organizations and government to assess and manage this “Nat Cat Risk”.
The presentation will briefly discuss the current trends in catastrophe modelling in Asia with respect to model availability. It will re-look at 2011 cat events and what message they give to our industry with a special focus on Flood risk and losses. The presentation will look at the future course of action that will help industry sail through similar or even bigger catastrophes we are sitting on.

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  • Merlin was an American Football player & an actor.
  • Significant EventsEarthquake, tsunami Japan – Strongest earthquake in Japan, Mw 9.0, with destructive tsunami waves up to 40 meters.Costliest event ever in terms of overall losses ($210bn) ; costliest event 2011 in terms of insured losses ($35-40bn)New Zealand-3 strong earthquakes (Mw 5.9/6.3/7.0) in 10 months.2nd highest losses for the insurance industry in 2011. (overall $16bn, insured losses $13bn)Floods Thailand Strong rainfalls from Aug.-Nov.; highest insured losses ever from natcat events in Thailand.$40bn overall losses and $10bn insured losses.Drought, famine Somalia Lack of rain, two short rainy seasons since October 2010. Expected deaths due to famine in the tens of thousands.TH in USA$15bn in overall losses, $7.3bn in insured lossesHU Irene in US$15bn overall losses and $7bn insured losses.
  • Number of events: 820The number is in line with the 10-year-average (2001-2010: 790).Fatalities: 27,000The number is quite low in comparison with previous years (2001-2010:106,000). The figures do not include the drought fatalities in East Africa, esp. Somalia. Overall direct losses: US$ 380bn2011 is the costliest year for overall losses due to natural catastrophes.Insured losses: US$ 105bnThe insured losses are the highest figures too, topped the 2005 losses in original values (US$ 101bn).
  • Insured Losses $105 bn47% of losses due to earthquakes (30-year-average = 10%)Cos JP EQ insurance protection is very low, particularly for commercial properties, the insurance industry bore just 17% of the total losses.
  • Over the last 30 years, Asia Pacific
  • Asia’s contribution in eco. Growth – 19% in 1980 to 35% in 2005 n expected to be 44% by 2030.
  • In the last decade (1900-2010), Flood eco damage has been most significant among all other perils (~ $32bn) from ~ 232 events.~62% of overall historical losses come from flooding.A study by OECD to assess the risk of flooding in coastal cities due to climate change ranked Kolkata and Mumbai as the top two most vulnerable urban agglomerations in theworld. It was estimated that the return period (or probability) of rainfall that resulted in Mumbai 2005 floods will increase from 1 in 200years to 1 in 100 years by 2080 due to climatechange .
  • 2/3 land area in China is prone to flood disasters of all types and severitiesThe economically developed eastern and southern parts, boasting over 50% of the national population, 35% of the national cultivated land and 2/3 of the national value of industrial and agricultural outputs, are most severely threatened by flood disasters.Since 1990, the average loss resulting from floods has amounted to about 1.5% of GDP of the same period
  • Coastal hazard assessments always sunder‐estimate the hazardRecent events have continued to surprised planners, engineers and most scientists (should they?)Hydrographic data, topographic data
  • Catastrophe Risk Assessment in Asia

    1. 1. MS Frontier Re Modeling Research Pte. Ltd.Catastrophe Risk Assessment in AsiaRoopa Malhotra Joshi31 May 2012 Private & Confidential
    2. 2. “One of life’s most painful moments comes when we mustadmit that we didn’t do our homework, that we are notprepared.” Merlin Olsen, Athlete Private & Confidential 2
    3. 3. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 3
    4. 4. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 4
    5. 5. World Map of Natural Disasters 2011 Private & Confidential 5
    6. 6. 2011 Distribution of Losses by ContinentSource: 2012 MünchenerRückversicherungs-Gesellschaft, GeoRisks Research, NatCatSERVICE-As at March 2012 Private & Confidential 6
    7. 7. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 7
    8. 8. 2011 Insured Losses Percentage Distribution per Continent 2% 44% 37% <1% 17%Continent Insured losses in US$mAmerica(North and South America) 40,000Europe 2,000Africa Minor damagesAsia 45,000 Source: MR NatCatSERVICEAustralia/Oceania 18,000 Private & Confidential 8
    9. 9. Historical Trend (1980-2011)Insured Losses Percentage Distribution per Continent 16% 13% 66% <1% 5%Continent Insured losses in US$mAmerica(North and South America) 566,000Europe 146,000Africa 2,000Asia 115,000 Source: MR NatCatSERVICEAustralia/Oceania 41,000 Private & Confidential 9
    10. 10. Historical Trend (1900-2010)Growing Pie of Asian Catastrophes Private & Confidential 10
    11. 11. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 11
    12. 12. Why Are The Numbers Bigger Now? Population Economy Insurance Penetration (source www.treasury.gov.au) Private & Confidential 12
    13. 13. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 13
    14. 14. Growing Threat of Flood in Asia Annual Average Damage ($US billion): 1990-2010Source:"EM-DAT: The OFDA/CRED International Disaster Database, Universite catholique de Louvain, Brussels, Belgium“ Private & Confidential 14
    15. 15. Model Availability in Asia AIR EQECAT RMS Risk Frontiers Typhoon Tropical Tropical Tropical Country Earthquake Earthquake rainfall – Earthquake Riverine Flood Hail Cyclone Cyclone Cyclone floodingAustralia a a a a a a a aChina a a a a a a aGuam a aHong Kong* a a a a aIndia a a aIndonesia a a aJapan a a a a a a aMacau* a aMalaysia a a aNew Zealand a a aPakistan a aPhilippines a a a a a aSaipan** aSingapore aSouth Korea a a a aTaiwan a a a a a aThailand a a a* Included in China EQ** Included in Guam EQ Private & Confidential 15
    16. 16. Economic Losses Due to Floods in Asia (1965 – 2001) Private & Confidential 16
    17. 17. World Flood Profile http://www.preventionweb.net/english/hazards/statistics/risk.php?hid=62 ¹: In billions US$ Private & Confidential 17
    18. 18. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 18
    19. 19. Flood Profiles - Asia Private & Confidential 19
    20. 20. Flood Profile - Bangladesh• Situated on the Ganges Delta and the many tributaries flowing into the Bay of Bengal.• 75% of Bangladesh is less than 10m above sea level and 80% is flood plain• Flash flood, local flood, monsoon flood and floods due to storm surge Source :http://www.banglapedia.org/httpdocs/ Private & Confidential 20
    21. 21. Flood Profile - India• Out of the countrys total geographical area of 329 million hectares about 45 million hectares is flood prone. Source : UNDP flood zone map Private & Confidential 21
    22. 22. Flood Profile - China Summarized Table of Floods in China P Rep from 1900 to 2011 Source: "EM-DAT: The OFDA/CRED International Disaster Database Private & Confidential 22
    23. 23. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 23
    24. 24. Uncertainties and Challenges in Flood Modeling• Metrological and hydrological data - availability and gaps• Large amount of data – heavy to process• Resolution of data• Loss data for historical events• Construction Standards• Lack of adequate funding / interest in research and initiative from Governments Private & Confidential 24
    25. 25. Agenda• Overview of Natural Disasters in 2011• How Badly Was Asia Effected?• Why Are The Numbers Bigger Now?• Growing Threat of Flood in Asia• Flood Profiles – Asia• Uncertainties And Challenges in Flood Modeling• Summary Private & Confidential 25
    26. 26. Summary• 2011 – Rude Awakening for Asian Insurance Industry• Asia’s potential for large catastrophe losses is increasing due to – growing population – economic growth – increasing insurance penetration• Flood models are the most complex models – large amounts of high resolution datasets are needed• Currently no standalone Flood Model available in Asia• Data quality : Garbage in – garbage out Private & Confidential 26
    27. 27. Private & Confidential 27

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