Author Archives: Markus Moravek

About Markus Moravek

Senior Manager, Model Product Strategy As a member of the RMS model product strategy team, Markus helps drive development of products that meet the evolving needs of RMS’ Asia-Pacific clients. Markus has more than 15 years of experience gained in the technology sector, covering a wide range of fields, from biotechnology, to information security and computational models. He is passionate about emerging trends in technology and science and how they can be best applied to the insurance industry. Markus holds a master’s degree in business from the University of Cambridge.

The Ever-present Threat of Tsunami: Are We Prepared?

Last week’s Mw8.3 earthquake offshore the Coquimbo region of central Chile served as a reminder that many coastal regions are exposed to earthquake and subsequent tsunami hazard.

While the extent of damage and loss of life from the recent Chile earthquake and tsunami continues to emerge and is tragic in itself, it is safe to say that things could have been much worse. After all, this is the same subduction zone that produced the 1960 Valdivia earthquake (or “Great Chilean earthquake”) 320 miles further to the south—the most powerful earthquake in recorded history.

The 1960 Valdivia earthquake had a magnitude of Mw9.6 and triggered a localized tsunami that battered the Chilean coast with waves in excess of 20 meters as well as far-field tsunami around the Pacific Ocean. Many events of M8.5+ produce tsunami that are truly global in nature and waves of several meters height can even reach coast lines more than 10,000 kilometers away from the event source, highlighting the need for international tsunami warning systems and awareness of population, city planners, and engineers in coastal areas.

 Coastlines At Risk of Tsunami

Tsunami and their deadly consequences have been with us since the beginning of mankind. What’s new, however, is the increasing awareness of the economic and insured losses that tsunami can cause. There are several mega cities in developed and emerging nations that are in the path of a future mega-tsunami, as reported by Dr. Robert Muir-Wood in his report Coastlines at Risk of Giant Earthquakes & Their Mega-Tsunami.

The 2011 earthquake and tsunami off the Pacific coast of Tohoku, Japan acted as a wake-up call to the insurance industry moving tsunami out of its quasi-niche status. With more than 15,000 lives lost, more than USD 300 billion in economic losses, and roughly USD 40 billion in insured losses, clients wanted to know where other similar high magnitude earthquakes and subsequent tsunami could occur, and what they would look like.

In response, RMS studied a multitude of high magnitude (Mw8.9-Mw9.6) event sources around the world and modeled the potential resulting tsunami scenarios. The scenarios are included in the RMS® Global Tsunami Scenario Catalog and include both historical and potential high-magnitude tsunami events that can be used to identify loss accumulations and guide underwriting decisions.

For example, below is an example output, showing the potential impact of a recurrence of the 1877 Chile Mw9.1 Earthquake (Fig 1a) and the impact of a potential future M9 scenario (Fig 1b) stemming from the Nankai Trough on the coast of Toyohashi, Japan.

Fig 1a: Re-simulation of the 1877 Chile Mw9.1 Earthquake. Coquimbo area shown. The inundation from this event would impact the entire Chilean coastline and exceed 9 meters inundation depth (further to the North). Fig 1b: M9 scenario originating on the Nankai Trough south of Japan, impacting the city of Toyohashi (population ~376 thousand), with inundation going far inland and exceeding 6 meters in height.

With rapid advances in science and engineering enabling a deeper understanding of tsunami risk, the insurance industry, city planners and local communities can better prepare for devastating tsunami, implementing appropriate risk mitigation strategies to reduce fatalities and the financial shocks that could be triggered by the next “big one.”

Exposure Data: The Undervalued Competitive Edge

High-quality catastrophe exposure data is key to a resilient and competitive insurer’s business. It can improve a wide range of risk management decisions, from basic geographical risk diversification to more advanced deterministic and probabilistic modeling.

The need to capture and use high quality exposure data is not new to insurance veterans. It is often referred to as the “garbage-in-garbage-out” principle, highlighting the dependency of catastrophe model’s output on reliable, high quality exposure data.

The underlying logic of this principle is echoed in the EU directive Solvency II, which requires firms to have a quantitative understanding of the uncertainties in their catastrophe models; including a thorough understanding of the uncertainties propagated by the data that feeds the models.

The competitive advantage of better exposure data

The implementation of Solvency II will lead to a better understanding of risk, increasing the resilience and competitiveness of insurance companies.

Firms see this, and more insurers are no longer passively reacting to the changes brought about by Solvency II. Increasingly, firms see the changes as an opportunity to proactively implement measures that improve exposure data quality and exposure data management.

And there is good reason for doing so: The majority of reinsurers polled recently by EY (formerly known as Ernst & Young) said quality of exposure data was their biggest concern. As a result, many reinsurers apply significant surcharges to cedants that are perceived to have low-quality exposure data and exposure management standards. Conversely, reinsurers are more likely to provide premium credits of 5 to 10 percent or offer additional capacity to cedants that submit high-quality exposure data.

Rating agencies and investors also expect more stringent exposure management processes and higher exposure data standards. Sound exposure data practices are, therefore, increasingly a priority for senior management, and changes are driven with the mindset of benefiting from the competitive advantage that high-quality exposure data offers.

However, managing the quality of exposure data over time can be a challenge: During its life cycle, exposure data degrades as it’s frequently reformatted and re-entered while passed on between different insurance entities along the insurance chain.

To fight the decrease of data quality, insurers spend considerable time and resources to re-format and re-enter exposure data as its being passed on along the insurance chain (and between departments within each individual touch point on the chain). However, due to the different systems, data standards and contract definitions in place a lot of this work remains manual and repetitive, inviting human error.

In this context, RMS’ new data standards, exposure management systems, and contract definition languages will be of interest to many insurers; not only because it will help them to tackle the data quality issue, but also by bringing considerable savings through reduced overhead expenditure, enabling clients to focus on their core insurance business.

Opportunities and Challenges ahead for Vietnam: Lessons Learned from Thailand

Earlier this month I gave a presentation at the 13th Asia Insurance Review conference in Ho Chi Minh City, Vietnam. It was a very worthwhile event that gave good insights into this young insurance market, and it was great to be in Ho Chi Minh City—a place that immediately captured me with its charm.

Bangkok, Thailand during the 2011 floods. Photo by Petty Officer 1st Class Jennifer Villalovos.

Vietnam shares striking similarities to Thailand, both from a peril and an exposure perspective. And, for Vietnam to become more resilient, it could make sense to learn from Thailand’s recent natural catastrophe (NatCat) experiences, and understand why some of the events were particularly painful in absence of good exposure data.

NatCat and Exposure similarities between Thailand and Vietnam 

Flood profile Vietnam shows a similar flood profile as Thailand, with significant flooding every year. Vietnam’s Mekong Delta, responsible for half of the country’s rice production, is especially susceptible to flooding.
Coast line Both coastlines are similar in length[1] and are similarly exposed to storm surge and tsunami.[2]
Tsunami & Tourism Thailand and its tourism industry were severely affected by the 2004 Indian Ocean Tsunami. Vietnam’s coastline and it’s tourism hotspots (e.g. Da Nang) show similar exposure to tsunami, potentially originating from the Manila Arc.2
GDP growth Thailand’s rapid GDP growth and accompanying exposure growth in the decade prior to the 2011 floods caught many by surprise. Vietnam has been growing even faster in the last ten years[3]; and exposure data quality (completeness and accuracy) have not necessarily kept up with this development.
Industrialization and global supply chain relevance Many underestimated the significance Thailand played in the global supply chain; for example, in 2011 about a quarter of all hard disk drives were produced in Thailand. Currently, Vietnam is undergoing the same rapid industrialization. For example, Samsung opened yet another multi-billion dollar industrial facility in Vietnam, propelling the country to the forefront of mobile phone production and increasing its significance to the global supply chain.

Implications for the Insurance Industry

In light of these similarities and the strong impact that global warming will have on Vietnam[4], regulators and (re)insurers are now facing several challenges and opportunities:

Modeling of perils and technical writing of business needs to be at the forefront of every executive’s mind for any mid-to long-term business plan. While this is not something that can be implemented overnight, the first steps have been taken, and it’s just a matter of time to get there.

But to get there as quickly and efficiently as possible, another crucial step stone must be taken: to improve exposure data quality in Vietnam. Better exposure insights in Thailand would almost certainly have led to a better understanding of exposure accumulations and could have made a significant difference post floods, resulting in less financial and reputational damage to many (re)insurers.

As insurance veterans know, it’s not a question of if a large scale NatCat event will happen in Vietnam, but a question of when. And while it’s not possible to fully eliminate the element of surprise in NatCat events, the severity of these surprise can be reduced by having better exposure data and exposure management in place.

This is where the real opportunity and challenge lies for Vietnam: getting better exposure insights to be able to mitigate risks. Ultimately, any (re)insurer wants to be in a confident position when someone poses this question: “Do you understand your exposures in Vietnam?”

RMS recognizes the importance of improving the quality and management of exposure data: Over the past twelve months, RMS has released exposure data sets for Vietnam and many other territories in the Asia-Pacific. To find out more about the RMS® Asia Exposure data sets, please e-mail  

[1] Source:
[2] Please refer to the RMS® Global Tsunami Scenario Catalog and the RMS® report on Coastlines at Risk of Giant Earthquakes & Their Mega-Tsunami, 2015
[3] The World Bank:, last accessed: 1 July 2015
[4] Vietnam ranks among the five countries to be most affected by global warming, World Bank Country Profile 2011: