A recent article entitled “A Seismic Change in Predicting How Earthquakes Will Shake Tall Buildings” that appeared in the New York Times on June 27, has generated some concern regarding the performance of tall buildings during earthquakes. The article cites statements made during the eleventh U.S. National Conference on Earthquake Engineering — which several RMS earthquake engineering experts attended, stating that there are large changes being introduced to ground motion models. Ground motion models predict the intensity of ground shaking at a site.
Hurricanes Harvey, Irma and Maria (HIM) tore through the Caribbean and U.S. in 2017, resulting in insured losses over US$80 billion. Twelve years after Hurricanes Katrina, Rita and Wilma (KRW), EXPOSURE asks if the (re)insurance industry was better prepared for its next “terrible trio” and what lessons can be learned.
Yasunori Araga, managing director – RMS Japan
Christine Ziehmann, vice president – Model Product Management, RMS
On June 14, RMS Japan welcomed 119 insurance professionals to its fourth In:Site conference — a record total, high-up on the twenty-sixth floor of the Sanno Park Tower in Tokyo, with the RMS Japan headquarters also based in this building.
Yasunori Araga, managing director of RMS Japan opened the afternoon event, and introduced an agenda that was highly relevant to the core concerns of RMS clients, from domestic issues such as earthquake risk in Japan, to the flooding and related losses following Hurricane Harvey in 2017. The agenda also explored the impact of modeling on one of the oldest lines of business — marine, and right through to one of the newest with cyber. The event attracted insurance professionals from multiple departments of insurance companies, such as reinsurance, risk management, property underwriting, casualty underwriting, marine underwriting, international and more.
Paul Burgess, Client Director, Asia-Pacific, RMS
Erica Xue, Senior Product Manager – Model Development, RMS
In a country that according to the United Nations, between 1995 and 2015 experienced the largest number of natural disasters globally, and with these losses largely uninsured, China is at the start of a journey to close its protection gap between economic and insured losses — during a sustained period of rapid GDP growth. Examples such as the devastating Sichuan earthquake in 2008 which killed more than 80,000 people and caused US$125 billion in economic losses saw just 0.3 percent of losses covered by insurance. Floods in southern China during the summer of 2016 saw economic losses of US$20 billion, the second costliest event of the year. But again, according to Munich Re, just two per cent was insured.
There has always been a balance between cross-subsidy and property-specific, risk-based underwriting and pricing in insurance, particularly for homeowners’ policies. While an actuary can easily quantify differences in fire risk for houses constructed from wood versus concrete based on claims, this becomes much more difficult when the peril concerned is infrequent, such as for earthquake or flood. Clearly risk models help to bridge this gap, but facilitating a move from cross-subsidy to risk-based pricing is more complex than simply using risk analytics. Factors such as regulation, market conditions, distribution channels and insurer IT systems all determine whether individual insurers and markets will move towards greater differentiation of risk. This is not to mention the political dimension of insurance affordability and social equity.
Corina Sutter is Director, Government and Regulatory Affairs at RMS, and is based in London. She joined fellow employees from RMS and RMS clients on our annual Impact Trek in Nepal during March this year. This is Corina’s account of her time in Nepal.
When you think about strengthening a building to make it more resilient to seismic events, does “retrofitting” come top of mind? And if you have heard of retrofitting, do you know why it is more cost-effective, and in many instances more suitable than simply rebuilding? This awareness challenge is what Build Change faces in Nepal; with regards to retrofitting not everyone is aware or convinced — yet.
Arriving in Kathmandu for the 2018 RMS Impact Trek, I was already aware of the many years that RMS has provided support for Build Change and its work in areas worst hit by catastrophic disasters. Our first day in the Build Change office was a crash course in their local objectives and challenges. Day Two saw us on a field trip to nearby Kirtipur to survey common building practices. It was a lot of information to process and it was not immediately clear to me what “impact” we could make during our short visit.
But it was later in the week — when, admittedly, the jet lag finally wore off — that I finally caught on.
New findings into the effect of a magnitude 7.0 earthquake originating from the 74 mile-long (119 kilometer) Hayward Fault in the California Bay Area, suggests that fire following earthquake alone could see more than 52,000 single-family homes burn. Earlier this month, the United States Geological Survey (USGS) released new results for their HayWired scenario, a scientifically plausible magnitude 7.0 earthquake on the Hayward fault. The hypothetical HayWired earthquake occurs at 4:18 p.m. on April 18, 2018, the anniversary of the magnitude 7.8 earthquake which struck San Francisco in 1906. The mainshock ruptures the fault along its length for about 52 miles (83 kilometers). The impact of such an event on one of the most densely populated and interconnected areas of the U.S. West Coast — with a population of about seven million people — would be disruptive.
Jochen Woessner is a lead modeler in earthquake model development at RMS, and is based in Zurich. He joined fellow employees from RMS and RMS clients on our annual Impact Trek in Nepal during March this year. This is Jochen’s account of his time in Nepal.
“I am sorry, you have only five minutes, please focus on the conclusion of your work,” said the convener G. Pokharel to Liva Shrestha, the local lead structural engineer for Build Change and myself when we sat down on the panel chairs of the session entitled “Disaster Risk Management and Prevention”. This session was on day three of the Fifteenth National Convention of Engineers in Kathmandu, organized by the Nepali Engineers’ Association. Liva calmly walked to the podium and started giving her talk on goals and achievements of Build Change. My thoughts started circling. “How could I best condense my 25-minute presentation into a clear five-minute summary?”
Callum Higgins is senior product analyst at RMS, and is based in London. He joined fellow employees from RMS and RMS clients on our annual Impact Trek in Nepal during March this year. This is Callum’s account of his time in Nepal.
On the first day of the Impact Trek, we were based at Build Change’s office in Kathmandu, hearing about the various projects the charity is working on in Nepal from Jessica Stanford (Housing Reconstruction Program Manager), as well as the technological innovations Build Change is using to increase the efficiency of their work from Adam McDonald (New Frontier Technology Architect). For day two, the Impact Trekkers were keen to get out of the office and into the city to examine some of the typical property construction in the region and the challenges that Build Change faces in making a greater proportion of these safe from earthquakes.