The APAC (re)insurance market needs to readjust its attitude to earthquake risk to encompass a more holistic picture, according to Chesley Williams, senior director at Moody’s RMS.
Speaking at this year’s Singapore International Reinsurance Conference, she said the APAC (re)insurance market was well geared up when it came to the historic major earthquake territories such as Japan, but suggested that recent research has prompted the modelling specialist to assume a higher earthquake risk profile for other territories.
Williams gave Shanghai as an example, saying that the latest seismology studies have suggested that earthquakes in China are more episodic than previously thought, and as such the risk profile of a major city such as Shanghai to temblor risk is now slightly higher than it used to be.
She added that risk modellers are continually adjusting their attitude to earthquake risk, and urged the (re)insurance market to adopt a similar approach.
“With every earthquake we learn a little bit more about earthquake science,” she said.
Her comments follow recent analysis by Moody’s RMS that the devastating magnitude earthquake that struck Tokyo on 1 September 1923, causing extensive damage to buildings and infrastructure, would be a $331 billion economic losses at today’s values.
Total damage at the time of the event is estimated at 5.5-6.5 billion yen. Using Moody’s RMS Earthquake and Tsunami HD Model, for a repeat of the 1923 Great Kanto Earthquake today, it estimated the economic losses would be to the order of 48.5 trillion JPY or US$331 billion, with insurance covering more than a third of the economic loss level.
The loss estimate includes losses to property and business interruption and accounts for post-event loss amplification factors such as increases in the pricing for material and labour.
udes losses to property and business interruption and accounts for post-event loss amplification factors such as increases in the pricing for material and labour.