In such an environment, the models are usually balancing the mentioned limitations with the increased market
requirements for
earthquake life-risk modelling. Expert judgement and collaboration with the leading institutions, including calibration with data from recognised academic or international relief organisations, is a crucial step in the model’s development. For example, Impact Forecasting’s latest earthquake fatality-risk model for Turkey is checked against observations from three past earthquakes in Turkey ranging in seismic intensity from 8 to 10.
In addition, life-risk modelling has been particularly challenging
for territories with moderately high seismicity such as Switzerland or Israel and in the case of as tsunami.
secondary earthquake hazards such
PAN-COUNTRY MODELLING There is an increasing demand for cross-country modelling that supports
insurers with the ability to estimate both local and regional losses in the event of large-scale catastrophes.
Impact Forecasting is currently working on its Euro-Mediterranean
earthquake model, including countries from Europe (see map on left), North Africa, Middle East and Caucasus. It is based on the most advanced methods and validations from the recent major European projects considering the regional and local specificities of the exposures of interest.
Notably, particular emphasis is given to emerging insurance capital
markets such as Turkey by preparing very detailed models adapted to specific insurers’ needs.
CONCLUDING REMARKS A host
“ Earthquake casualty modelling is fundamental for enabling catastrophe life insurers to understand their possible financial losses and in turn to buy the most relevant reinsurance cover.”
of limitations and opportunities accompany today’s
earthquake modelling challenges. There is pressure for more frequent updates to comply with the increased market requirements, improved exposure data resolution, Solvency II regulation and the latest scientific developments.
While calibration data are not always available or of good quality and
there needs to be improved collaboration between the modellers and the end-users, model developers embrace the next steps by learning from recent events and creating models that help insurers better understand their risks across a plethora of traditional and emerging countries and lines of business.
Dr Goran Trendafiloski is an earthquake catastrophe modeller at Impact Forecasting, Aon Benfield, specialising in seismic risk and vulnerability. For more details, please visit:
www.aon.com/reinsurance
October 2011 | INTELLIGENT INSURER | 57
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