AIR Worldwide Significantly Expands Its Model Coverage for Southeast Asia
BOSTON, June 20, 2016 — Catastrophe risk modeling firm AIR Worldwide (AIR) today announced that it has significantly expanded and enhanced its earthquake and typhoon models for Southeast Asia to provide insurers with a comprehensive and up-to-date view of risk in this region. The new earthquake model features the ability to account for the tsunami and liquefaction subperils for Indonesia, the Philippines, and Taiwan. The updated typhoon model features a new precipitation-induced flooding module built using high-resolution data and also a probabilistic storm surge module for Hong Kong, the Philippines, and Taiwan. Additionally, the model domain has been expanded to include the following countries and territories: Guam, Macau, Saipan, and Vietnam for typhoon risk; and Hong Kong, Macau, Vietnam, Singapore, Thailand, Brunei, and Malaysia for earthquake risk. AIR Worldwide is a Verisk Analytics (Nasdaq:VRSK) business.
“As one of the largest primary insurers across Southeast Asia, it’s in our best interest to use a comprehensive risk management tool to better understand and quantify natural catastrophe risk in this region,” said Takuya Yano, head of the risk management team for the International Supervisory Department of Mitsui Sumitomo Insurance. “We look forward to using AIR’s models because their scope of model development covers not only updates to existing models but also includes expanded territories and countries, new lines of business, and new subperils such as tsunami and storm surge. We believe that the upcoming AIR models will give us new and valuable insights for addressing natural disaster risk in Southeast Asia.”
“We’re very proud of our ability to understand and interpret catastrophe models when writing insurance and reinsurance across the world,” said Hajime Sano, head of catastrophe analytics at Sompo Risk Management & Health Care Inc. “We look forward to leveraging the new AIR models that will allow us to create our view of risk from earthquakes, typhoons and their associated sub-perils in Southeast Asia, thereby improving our catastrophe risk management.”
“Southeast Asia has some of the fastest-growing economies. Located partly on the Ring of Fire, it’s seismically one of the most active regions in the world, with earthquakes of magnitude 8.0 or larger occurring once every eight to ten years, on average,” said Dr. Jayanta Guin, executive vice president and chief research officer at AIR Worldwide. “On the atmospheric side, more than 25 tropical cyclones typically form each year in the Northwest Pacific. A wealth of data has become available due to the number of catastrophes in this region, and AIR scientists have been conducting extensive research over the past ten years to better understand these events. The results are enhanced catastrophe models that will provide insurers and industry stakeholders with the most advanced view of shake, tsunami, liquefaction, wind, precipitation-induced flooding, and storm surge risk in Southeast Asia.”
With the incorporation of the latest historical seismic data from all global and local sources, active fault data, GPS data on crustal deformation, use of high-resolution soil maps to assess the potential for liquefaction, and damage survey data from recent earthquakes, the AIR Earthquake Model for Southeast Asia provides the most current view of risk. Additionally, the model benefited from thorough peer review of the hazard and vulnerability modules.
The AIR Typhoon Model for Southeast Asia—part of AIR’s Northwest Pacific Basinwide Typhoon Model—provides a probabilistic approach for determining the likelihood of losses from typhoon winds, precipitation-induced flooding, and storm surge. The model incorporates cutting-edge science that best reflects the current understanding of the behavior of tropical cyclones in the Northwest Pacific Basin along with the latest engineering research into the response of local construction. Loss data from the Southeast Asia insurance market was used to validate model results.
To ensure the most robust and scientifically rigorous results possible, the AIR models have been built from the ground up, with each model component independently validated against multiple sources and data from historical events. Additionally, both the AIR Earthquake Model for Southeast Asia and the AIR Typhoon Model for Southeast Asia incorporate highly detailed industry exposure databases at 1-km grid resolution, accounting for each country’s unique building practices. Both models also incorporate findings from studies of local building codes, damage surveys, loss experience data, and structural engineering research. They contain information on the most recent risk counts, replacement values, occupancies, and construction types of insurable structures, including builder’s risk. Industrial facilities and tall buildings are among the highest-value risks in Southeast Asia and account for a significant portion of insured value in these countries. The AIR models have separate damage functions for industrial facilities and tall buildings.
“This has been one of our most comprehensive model expansions to date,” said Dr. Milan Simic, managing director of international operations at AIR Worldwide. “We believe that our significant effort will provide clients with a better understanding of the risk and therefore a distinct advantage when writing business in this region. Furthermore, only a fraction of the total economic risk from natural disasters is covered by the insurance industry today, particularly in Asia. We’re confident that the adoption of our innovative new models will help narrow the protection gap by providing the industry with the necessary tools to better understand and manage catastrophe risk in this part of the world.”
The models for Southeast Asia are currently available in the CATRADER® Version 18 and Touchstone® 4.0 catastrophe risk management systems. In addition to new and updated models, Touchstone 4.0 features a variety of enhancements designed to improve performance, workflow efficiency, and the overall user experience.
About AIR Worldwide
AIR Worldwide (AIR) provides catastrophe risk modeling solutions that make individuals, businesses, and society more resilient. AIR founded the catastrophe modeling industry in 1987, and today models the risk from natural catastrophes and terrorism globally. Insurance, reinsurance, financial, corporate, and government clients rely on AIR’s advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk Analytics (Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.